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Partridge Backtrack and Karr Clawback Dead; Nothing Happens to Sales Tax Rate

Senator Jeff Monroe (R-24/Pierre) can be happy that he was wrong.

Three months ago, Senator Monroe predicted the Legislature would repeal the Partridge Amendment.

Cue the most cogent and concise explanation of the Partridge Amendment you’ll find anywhere on the Internet:

You’re never gonna see government lower a tax,” Monroe said of the automatic statutory sales tax reduction that his colleague Jeff Partridge wrote into the sales-tax-for-teacher-pay bill in 2016. “To me, it’s a no-brainer. I mean, it’s just not gonna happen.”

Senator Monroe was most certainly right that Senator Partridge (R-34/Rapid City) and others tried to take that tax cut away. But a Session-long struggle to come up with passable language failed yesterday. The conference committee of Representatives Gosch, Beal, and Ring and Senators Kennedy, Stalzer, and Wiik got together at 5 p.m. Tuesday. They voted down Rep. Chris Karr’s (R-11/Sioux Falls) proposal for a clean-up of the original automatic Partridge cut 2–4 (Yeas: Wiik and Kennedy). They tied 3–3 (Yeas: Gosch, Beal, and Stalzer) on Senator Partridge’s proposed backtrack, which would have left the the mere introduction of a sales tax cut tied to remote-vendor revenue at the discretion of Joint Appropriations*. (Rep. Ray Ring, the only economist in the room, deemed both proposals crap.)

The conference committee threw in the towel and recommended unanimously that the House and Senate not concur and not appoint a new conference committee. The Senate and House agreed to disagree and abandoned the effort to revise the 2016 Partridge Amendment.

So to what status quo did our legislators surrender? Well, the 2016 Partridge Amendment (more accurately referred to now as SDCL 10-64-9) dictates that our state sales tax be reduced by one-tenth of a percentage point for each $20 million in additional revenue from the Wayfair tax. But it appears that in calendar year 2018, given that the statute permitting collection of remote-seller revenues under Wayfair only kicked in in time to allow collections in December, we took in a measly $1.4 million in extra revenue. So come July 1, our 4.5% sales tax rate isn’t going anywhere.

Even if that rate picks up, SDCL 10-64-9 suffers from three significant fuzzeries  that still have not been resolved and leave the calculation and execution of any Partridge payback in doubt. So when 2020 Session rolls around, legislators will have plenty of reason to revisit this issue.

Oh yeah, and 2020 will be an election year. Maybe the prospect of giving every voter a tax cut four months before the election will stir some concerted action to really prove Senator Monroe wrong.

*Say, if we had passed HB 1265 with the permissive “may,” specifically authorizing Joint Appropriations to introduce legislation to reduce the sales tax rate, could some parly-pro hawk have contended that HB 1265 meant no other committee could introduce such legislation?