Referring a law to a public vote is interesting, not only because it tests whether a bill the Legislature passed really reflects the will of the voters, but also because a successful referendum petition has the immediate effect of suspending a law that otherwise would have taken effect on July 1. Even if voters approve the referred law (remember: a vote Yes on a referendum lets the law take effect; a vote No kills the law), it won’t take effect until the following July.
So citizens, when you sign the petition to refer Senate Bill 245, the plan to use sales tax dollars to lower homeowner property taxes, you aren’t just putting the law to a vote; you are stopping that law from taking effect for an entire year.
But that suspension won’t affect all of SB 245. When House State Affairs hoghoused the previously empty vehicle bill on March 2, they included a provision enacting the sales-tax transfer on July 1, 2027. Referred or not, SB 245 won’t start putting sales dollars toward reducing homeowner property taxes until next year, when the state sales tax is scheduled to jump back up to 4.5% from the current 4.2%.
Also important to note: the increase in sales tax is triggered by the sunset clause passed in 2023, not by SB 245. So referring SB 245 does not change the sales tax rate: petition or not, you’ll pay 4.2% sales tax on your groceries on July 1, 2026, and you’ll start paying 4.5% on your groceries come July 1, 2027.
The referendum petition would suspend one important provision of SB 245. It would pause the creation of the homeowner property tax reduction fund, and it would delay the transfer of $55,896,576 from the state’s reserves into that fund that SB 245 schedules for July 1 of this year for an entire year.
So, to be clear, the simple act of referring SB 245—not actually voting in down in November, but simply filing a petition with the 17,508 voter signatures necessary to put SB 245 on the November ballot—would delay draining the reserves and reducing homeowner property taxes for at least one year.
You know the voters should just 86 their representatives.
Thank-you Cory for your explanation. So important. Thank-you Cathy Brechtelsbauer and Nate Horsted and DRA.
Our citizens need the money provided by the increased sales tax receipts to adequately compensate our educators, medical providers, and state employees, many of whom are providing services to our low income citizens. Granted, a more equitable system would be a state income tax, but until we can generate the common sense to enact that…
Remember, SD, we are NOT an island. We’ve been losing our best and brightest to the rest of the world for 50 years. How many SD lonely grandmothers do you know? Wouldn’t it be cool to NOT be one of those? Wouldn’t it be cool to have your kids and grandkids find jobs in the South Dakota they love? That extra 3 tenths of a percent would go a long way to help that happen.
What we’re trying to do here is pause the state’s property tax relief plan to let the legislature figure out tax relief that’s more fair.
The good former legislator from Britton neatly captures the core issue motivating the referral of SB 245: wealth transfer and tax fairness. How fair is it to take money from everybody and give it to a special interest group—in this case, people who happen to own homes? And even within that wealth transfer, how fair is it to structure this favor so that the more wealth one already has, the more one gets?
And if we have over $100 million a year in fiscal wiggle room to make a wealth transfer like SB 245 possible, what’s the best way to spend that $100M+? Kadyn Wittman had to fight for four years to convince her Legislative colleagues that we could afford to transfer a mere $600K from the general fund to knock another 40 cents off the cost of school meals for families in one narrow near-poverty income bracket. It took a lot of work this Session to convince Governor Rhoden that we could afford $34.5M to fund a 1.4% increase for schools, state employees, and health care; $100M would have made it possible to make that increase match 2.5% inflation and do some other good in the budget. But no—with SB 245, the Legislature chose to throw that money back to subsidize big houses and permanently hamstring state investments in public goods.
The legislature rejected 5 million in funding for struggling food banks in SD. They also rejected 1.2 for after school care for kids of working parents. 56 million, most of which will go to home owners with the most expensive homes, is just sad. Republicans themselves called it the “Ted Turner Tax”, but unfortunately do not have enough control over their party to elect people with brain cells.