Given Governor Kristi Noem’s disagreement with both Senate President Pro-Tempore Lee Schoenbeck and Speaker of the House Spencer Gosch about where she stood on repealing the sales tax on food during the 2022 Legislative Session, let’s put Noem’s own words during Session on the record.
In addition to comments Noem made opposing any reduction in sales tax in early February, Noem sat for a discussion told reporter Joe Sneve, in a livestreamed interview on March 8, 2022, that proposals to repeal the food tax and to lower the overall sales tax rate were meant to push a state income tax. She said sales tax cuts would force the state to make painful budget cuts comparable to the deep 10% cuts that Governor Dennis Daugaard and the Legislature had to work out in 2011 to reconcile a severe structural deficit. She indicated that elected officials who propose a food tax cut without offering details on what programs they will cut to make the food tax repeal work are not having an honest debate.
[6:12] Sneve: Well there has been two proposals, both have died in the senate, one to reduce sales tax by a half penny and then yesterday, a bill was a hoghouse to have a food sales tax repeal that also died. You’ve been resistant to that though. Is that… because you don’t think things are going to be that rosy that long?
Noem: Well it’s just—I think they’re setting us up for an income tax. I think that they know when they propose something like that it’s not sustainable as far as our current programs and they know that they’ll be putting South Dakota in the position to get in—have a significant income tax debate within two or three years
Sneve: Isn’t the counter to that though that could force the government’s hand to narrow its scope and make cuts down the line?
Noem: None of these legislators were here last time they had to make significant cuts at state government. It was a pretty painful process…those 10 percent cuts that happened across the board that happened during Governor Daugaard’s administration and you know they’re not debating at all the six percent increase that goes to education and state employees and health care providers, but making those cuts is a painful process and none of those legislators that are proposing—it’s always interesting to me—proposing these significant programs are offering up savings.
I had one legislator in my office yesterday that said I should be building housing for low-income people and children that don’t have homes, and I said well did you bring a bill on that this session? And they didn’t.
So a lot of times they throw things out to me and they haven’t offered a solution on where to cut. So if they’re looking at reducing spending for state government, I didn’t see those house appropriators bring forward big bills to reduce programs this year. I didn’t see it and if they brought some and Larry can give a little perspective I suppose on what it’s like in state government, but we—I offered tax reductions this year. I offered tightening our belt and we’ve reduced full-time employees in state government. We’ve let leases go on state government, we’re doing that. But to force something like that is just setting the state up for an income tax….
[11:00] Noem: So while they go and propose eliminating the sales tax on food—I understand that debate. We had—when I was in the Legislature, I was on the tax committee, vice chair of tax committee, we debated that every year, and so that is certainly something I’m familiar with. To bring it up the last week and then not offer cuts to make it actually work or not to be palms up and say if we do this then you can’t give six percent to education, you can’t increase teacher salaries, you can’t pay health care providers, and you can’t increase wages for state employees, because that’s an honest debate, and they’re not having that right now… [Governor Kristi Noem, interviewed by Joe Sneve, in “Gov. Kristi Noem Joins State Budget Panel Discussion,” video posted to Governor Kristi Noem Youtube channel, livestreamed 2022.03.08].
Governor Noem did not support cutting the food tax last winter. She said repealing the food tax would open the door to an income tax. She said we shouldn’t even talk about cutting sales tax unless we have an honest discussion about replacement revenue or spending cuts. Yet since the end of September, when she reversed course and endorsed repealing the food tax, Noem has proposed no budget cuts or replacement revenue to make the food tax repeal work.