Governor Kristi Noem is sticking with her campaign flip-flop to finally implement the Democratic plan to exempt food from the state sales tax. In yesterday’s budget address, Governor Noem promised to repeal the food tax… and after telling Republicans last month to spend less time bashing Joe Biden, she made sure she phrased her tax cut in terms of bashing Joe Biden:
“Eliminating the sales tax on groceries is the biggest way in my budget that we can help South Dakotans tackle the challenge of Joe Biden’s inflation and protect their hard-earned money. Unfortunately, food costs have risen by far too much. Families are struggling to make ends meet as a result of that,” Noem said.
Noem says the state has $310 million in permanent revenue growth, which would make up for the lost grocery tax.
“We still, even after this tax cut, will have $208 million that will be available to us to meet the needs that the state government is responsible for. We have been exceeding estimates by about $25 million per month. The people of South Dakota overwhelmingly want this tax cut, and they know that we can afford it,” Noem said [Carter Schmidt, “Noem’s Budget Address Key Points and Reaction from Lawmakers,” KELO-TV, 2022.12.06].
Reminder: President Biden didn’t cause inflation. Coronavirus, supply-chain disruptions, Putin’s invasion of Ukraine, and the fact that y’all keep wanting to buy lots of stuff cause inflation. And Noem’s budget assumes that the President or the invisible hand or something will ease inflation back to 5%.
But the big news is that Kristi Noem is still saying she’ll do what she told voters she would do and finally catch up with Minnesota and most of the rest of the nation in recognizing that we ought not tax peanut butter sandwiches and baby food.
Noem’s math above indicates she thinks exempting food from sales tax will reduce sales tax revenues by $102 million. In October, the Legislative Research Council said cutting the food tax will cost $119.1 million. But we can eat either figure, says Governor Noem, because we’re bringing in $310 million in new tax revenue from more economic activity. Take away the LRC estimate, and we have $191 million in new money to spend. That’s more than enough to pay for voter-approved Medicaid expansion, whether at the LRC’s estimated $33.2 million per year or Noem’s radically inflated and false claim of $80 million per year. Take the upper-bound estimates on each major policy initiative, and Noem’s revenue projections leave $111 million in new money for new programs, or maybe just increases for education, state employees, and healthcare providers to keep up with inflation. Noem proposes 5% increases for those areas, totaling just about $91 million.
Noem says this $310 million in ongoing magic money is actually a conservative estimate and includes her (partisan, Biden-bashing) assumption that a recession is coming. But $310 million in ongoing mad money sounds awfully liberal to me—not that I’m complaining! If we have the money to cover a food tax repeal, Medicaid expansion, and more funding for education, health care, and the talented workers who plow our roads and tend our parks, I’m all for it!