In addition to obtaining the Attorney General’s title and explanation and the Legislative Research Council’s fiscal note, the sponsors of the proposed initiative to ban property taxes and replace them with a retail transaction tax must obtain the Secretary of State’s certification that the measure satisfies the single-subject rule, the provision of Article 23 Section 1 of the South Dakota Constitution. If Secretary of State Monae Johnson determines that the proposed amendment embraces more than one subject, she can refuse to allow circulation of the petition for that amendment.
As I pointed out in my August analysis, this measure is ripe for a single-subject challenge. Repeal property tax, impose a new tax on retail transactions—those are two distinct and entirely severable proposals with two distinct purposes.
The Attorney General identifies two purposes in his official title for the initiative “An Amendment to the South Dakota Constitution to repeal real property taxes and replace them with a ‘retail transaction’ tax.” The sponsors themselves describe the goal of their amendment bipartitely: “The goal of this amendment is to abolish property taxes and replace them with an alternative retail transaction tax.”
The purpose of the first half of these descriptions, embodied in Sections 1–7 and 9 of the proposed amendment, is to provide property tax relief. The purpose of the second half, embodied solely in Section 8 of the amendment, is to fund political subdivisions with a new source of revenue. These purposes do not depend on each other. The voters could cap, reduce, or eliminate a tax via constitutional amendment without writing any new tax or revenue source into the constitution. Voters did exactly that in 2000 when they approved Amendment C, which added Section 15 to Article 11 of the South Dakota Constitution to ban inheritance taxes. Amendment C included no provision for replacing the revenue South Dakota collected on maybe a fifth of all estates, including the $1,320 Ron Arnold’s kids had to pay after he died in 1994.
Abolishing a tax is one purpose. Establishing a new tax is another purpose. The first purpose does not depend on the second purpose. As the South Dakota Supreme Court made clear when it overturned 2020 Amendment A in Thom and Miller v. Barnett, “a violation [of the single-subject rule] occurs when the proposed amendment contains more than one subject, with different objects or purposes, that are not dependent upon or connected with each other” [p. 25].
The Legislative Research Council said in its initial review that the measure “appears to embrace only one subject—taxation.” But statute does not bind the Secretary of State to the LRC’s opinion. If Secretary Johnson sees repealing property tax and imposing a retail transaction tax as two different subjects, she can torpedo this two-subject tax scheme before sponsors can collect a single petition signature.
Monday is the deadline for the sponsors to submit their proposed initiated amendment to the Secretary of State. SDCL 12-13-26.1 gives the Secretary fifteen working days to rule on the amendment’s single-subjectivity. State offices take Veterans Day off, so Johnson would have Tuesday, November 25, to decide whether she can certify the initiated amendment petition for circulation.
A one and a two, a single subject, just for you. Will this pass, then get cancelled? Pass the latter part first for double taxation. Then don’t tax property but as Donald Duck sayeth, tax the air we breathe then we all have to pay it.