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Schoenbeck, Senate State Affairs Kills Sales Tax Relief, Because SD Headed for “Fiscal Cliff”

The excitement about passing a real tax cut for all South Dakotans didn’t last long. Two days after the House passed a two-step reduction of the state sales tax from 4.5% to 4.0%, Senate State Affairs snatched up that tax relief and said, no way.

House Bill 1327 went to Senate State Affairs Friday and met the Senate king Lee Schoenbeck standing at the door with his golf club axe in hand.

“Not one friend of mine has ever said, ‘Hey, when’s that sales tax going to go from four-and-a-half to four percent?’ Not one,” said Senator Lee Schoenbeck, R-Watertown [Bob Mercer, “Senate Panel Nixes House Sales-Tax Cut,” KELO-TV, updated 2022.02.26].

That’s funny: three of Schoenbeck’s Republican Senator friends and ten of his Republican Representative friends all testified to the committee that the sales tax should go from four-and-a-half percent to four percent by July 1, 2023. So did Schoenbeck’s corporate friends at Americans for Prosperity, who spent $339,423.39 to do all the work for Schoenbeck’s ballot question committee to promote Schoenbeck’s Amendment C to prevent the voters from raising taxes or spending money.

But Schoenbeck “broke kneecaps” (his words!) to impose that extra half-penny sales tax in 2016, and he’s not going to let irresponsible ideology or shaky economic optimism undo that revenue stream. Just like Governor Noem, Senator Schoenbeck knows South Dakota’s surpluses are fake and our economy and budget are about to take a hard turn downward now that federal pandemic stimulus dollars are done. Unlike Governor Noem, Senator Schoenbeck will say so straight up:

The $150 million ongoing cut that the House wants would boomerang on lawmakers and hurt state government, Schoenbeck warned, saying there will be “a predictable fiscal cliff when this federal firehose of cash turns off” as the COVID-19 pandemic winds down. South Dakota received more than $8 billion in federal coronavirus aid that went to governments, businesses and families [Mercer, 2022.02.26].

Senate State Affairs voted 8–1 to kill HB 1327. The lone vote for HB 1327 came from Democratic Senator Troy Heinert, who said that even with that fiscal cliff coming, we could at least afford to relieve South Dakotans of the regressive tax burden on food. South Dakota’s 4.5% sales tax will thus remain in place, unmodified, keeping our teacher salaries from falling even further behind the lofty goals of the 2016 compromise.


  1. Anne Beal 2022-02-26

    you don’t think the state should save up for Medicaid expansion? How will we pay the state’s share of that when it happens?
    Way more people are advocating for the expansion of Medicaid than for rolling back sales taxes. So far I have only met one person complaining about the sales taxes, while encountering multiple people asking for signatures to get Medicaid expansion on the ballot. The mood of the populace seems to be in favor of an increase in state spending and an increase in taxes. Come November we will find out if people want to cut or increase their taxes. Why not wait until then?

  2. Cory Allen Heidelberger Post author | 2022-02-26

    Anne, Medicaid expansion will probably pay for itself, thanks to the stimulatory effect of hundreds of millions of new federal dollars coming into our economy every year. You and Senator Schoenbeck both see what good federal covid aid did for our budget; think of Medicaid expansion as a way to extend that boon.

    It is always prudent to plan ahead. If you would like to bankroll some cash to cover future Medicaid expansion costs, Senator Steinhauer already has a brilliant mechanism in Senate Bill 102, his Medicaid expansion fund, which will squirrel away the extra Biden bucks we get from the American Rescue Plan Act for our first two years of expanding Medicaid to provide some budget cushion for the years after that when the federal match settles back to 90%.

    That said, Anne, I’m glad to hear that you and your fellow conservatives have recognized that some tax increases are good and that we can now have a grown-up conversation about smart fiscal policy instead of a one-note Grover-Norquistian shouting match in which anyone who proposes paying for a social program is an evil socialist spitting on Saint Ronnie’s grave. Since you feel good about the 2016 tax increase, how about we talk about simply maintaining the current level of taxation but shifting the burden to make it fairer, by, oh, say, repealing the tax on food and replacing it with a tax on trusts and millionaires?

  3. mike from iowa 2022-02-26

    Why would magats accept covid relief funds from Uncle Sam when they wouldn’t accept three years of free Medicaid and then pay only 10 % thereafter?

  4. jerry 2022-02-26

    Meanwhile, Pennington County assessments on property, will rise 10 to 25%.

    “Property owners should receive their property assessments in the mail next week, the county Equalization Director said Friday.

    Shannon Rittberger said the majority of properties saw a 10-25% increase in assessments with a total valuation of $16.2 billion, which is about 51,000 properties. He said the 10-25% increase is for 68% of the taxable properties in the county, which is 31,245 properties.”
    Rapid City Journal 2.25.22

    Reminds me of Janklow who claimed he would lower all property taxes, which he did do. Then he raised the mill levy and well, you all know how that works don’t ya?

  5. Cory Allen Heidelberger Post author | 2022-02-26

    But sure, since Kristi Noem has failed to promote any locally sustainable economic growth, we should protect our revenue sources, rein in all of her extravagant spending proposals, and leave room for the voters to implement this sensible health and fiscal policy come November.

    Noem’s porkbarrel Rapid City shooting range (still alive in SB 175) would pay for a whole year of Medicaid expansion. We have plenty of places to shoot guns already, but tens of thousands of South Dakotans have no alternative for affordable health care.

  6. 96Tears 2022-02-26

    If we have to have a Republican as governor, why can’t it be someone with a sense of humor and connection with the real world like Lee Schoenbeck? Instead, we’re stuck with a deadbeat, self-serving, stuck up, delusional and pathological drama queen who thinks she’s presidential material.

  7. Monty 2022-02-26

    Yes, why not the subtle, false, and treacherous Mr. Schoenbeck.

  8. larry kurtz 2022-02-26

    No doubt Mr. Schoenbeck can recite the scorpion and frog story in the original Russian.

  9. Porter Lansing 2022-02-26

    Anne Beal asks, ” How will we pay the state’s share of that when it happens?”

    This is subconscious thought for, “Everybody knows there will be no economic growth in South Dakota. There hasn’t been any in fifty years and we Republicans have done nothing to help promote any, either. Ain’t gonna happen.”

  10. Arlo Blundt 2022-02-26

    The Republicans believe that only the sales tax the poor pay in their food can save South Dakota from a future fiscal disaster. They are silent about the billions in trust funds the super wealthy have stashed, tax free, in Sioux Falls banks. Only the poor can save us.

  11. grudznick 2022-02-26

    Mr. Schoenbeck seems a wise fellow.

    Mr. Heinert cannot do basic math.

  12. Mark Anderson 2022-02-26

    Well our Florida senator, you know the guy who took the fifth 76 or so times wants to make sure the poor pay an income tax. Its a part of the Republican delusion on everything fiscal. You know, continue to play off the poor whites against all those welfare queens and all others of a darker persuasion. If they ever learned the truth there would be heil to pay.

  13. John 2022-02-27

    Sen Schoenbeck shows he’s another lying politician.
    If he’s opposed to fulfilling the promise to rollback the tax increase, then AT LEAST, remove the sales tax from edible, uncooked food.

  14. O 2022-02-27

    John, what promise to roll back the 1/2 penny are you referring to?

  15. grudznick 2022-02-27

    Mr. Schoenbeck did not make the Hungarian Grouse promise.

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