Last month, Attorney General Mark Vargo issued draft explanations of two initiatives proposing to repeal South Dakota’s sales tax on food. The Attorney General’s drafts incorrectly assert that the constitutional amendment and initiative law proposed by ballot question committee Dakotans for Health would prevent the state and municipalities from taxing food.
Three of the six comments submitted during the ten-day public comment period pointed out this error. But yesterday, Attorney General Vargo issued his final explanations unchanged, still asserting that the amendment and the statute apply to cities as well as the state.
Rapid City lawyer James Leach, who provides legal guidance to Dakotans for Health, pointed out that the Attorney General’s explanations contradict the Legislative Research Council’s finding in its fiscal notes that the proposed initiatives apply only to the state:
With respect, the LRC is correct. Neither proposal affects municipalities’ ability to tax food and drink. Both measures say that “the state may not tax” (emphasis added) food and drink. The State’s power to tax food and drink comes from SDCL 10-45 and 10-46. Municipalities’ power to tax food and drink has a separate source: SDCL 10-52-2.
The word “State” and the word “municipalities” have plain, common, ordinary meanings. Prohibiting the State from taxing food and drink does not limit municipalities’ ability to do so [James D. Leach, comment submitted to A.G. Mark Vargo, 2022.10.25].
Two eager readers of this blog, Richard Schreiver of Lennox and Dale Christensen of Watertown, submitted similar comments. Schreiver added, “When legislators (and the people are acting as legislators when they vote on these issues at the polls) write laws they include language that specifies which governmental divisions or subdivisions of the state that law affects. Examples: SDCL 1-25-1, SDCL 1-27-1.1, and SDCL 1-27-20.”
Representative Lana Greenfield (R-Old 2/Doland) submits a comment that has nothing to do with the Attorney General’s explanation. Instead, Rep. Greenfield irrelevantly states that she only wants to exempt “foods with nutritional value” from sales tax. “It is senseless,” says Rep. Greenfield, ” to exempt soda, chips, and candy from sales tax.”
It’s funny to see Republican Rep. Greenfield propose using taxes to socially engineer people’s eating habits. It’s also funny to see Rep. Greenfield miss the point of this public comment period. Rep. Greenfield should know better: she voted for 2021 Senate Bill 123, which created this largely frivolous 20-day delay in the initiative process, so she should know that the law calls for comment on the attorney general’s explanation, not on the initiative itself. The Attorney General has no power to rewrite the initiative; his explanation cannot include any suggestions for alternative initiatives.
One Dennis Lutterman submits a similarly irrelevant comment—again, not irrelevant to the broader public policy discussion, but irrelevant to the specific legal parameters created by Greenfield and the Legislature for this public comment process—urging us to keep taxing food, because it makes people eat better and prevents the election of Democrats, the implementation of an income tax, and the loss of South Dakota’s low-tax/no-tax marketing advantage:
Keep the tax. It works. Look around, you will see that most people are eating better than they should.
I can look ahead and see the future here. Without a tax on food, there will come a budget shortfall. Our political governor will be one of the many Republicans getting blamed for it. Democrats will get elected. They will propose an income tax and get it. South Dakota will lose its main selling point for the future.
I will be moving to a no income tax state [Dennis Lutterman, comment submitted to A.G. Vargo, received 2022.11.04].
Like Representative Greenfield, Lutterman expresses debatable policy points (though I would like to see evidence to his assertion that the current tax on all food drives anyone to eat better; if anything, a tax making all food cost more only drives more consumption of cheaper, less healthy food…although maybe Lutterman believes eating better means eating less), but they have nothing to do with the content of the Attorney General’s explanation of the proposed initiatives, which is all the law allows the A.G. to consider in this process.
Public comments were due November 4. Stacy Kooistra, the city attorney for Sioux Falls, chimed in late on November 8. Kooistra endorsed the Attorney General’s misreading of the proposals and said the City of Sioux Falls wanted the A.G.’s explanation to tell voters that removing sales tax from food “will significantly impact both our general fund and capital fund, which will likely result in the reduction of services and capital investments.” Kooistra said the City of Sioux Falls “believes that the impact will be even greater on South Dakota’s smaller communities, due to their sales tax bases being far less diversified.” Koositra said the city presumes “there will be a fiscal note” that will inform the voters of “the total impact to the state and municipalities”… but that fiscal note already came out three weeks ago and indicated no fiscal impact to Sioux Falls or any other municipality, since the LRC concluded “Municipalities could still tax anything sold for eating or drinking by humans.”
Petition circulators are required to provide people who sign their petitions with both the Attorney General’s explanation and the Legislative Research Council’s fiscal note. The state cannot require petitioners to hand out contradictory information. These two agencies need to reconcile their differences. More to the point, A.G. Vargo needs to read the exact language of the proposed initiatives, the way the LRC did, and tell petition signers and voters that these measures affect only the state, not municipalities.