Sales tax hikes come with warnings

South Dakota has turned to consumption taxes for decades to fund government

PIERRE – The South Dakota Legislature dipped its bucket into a familiar well during the past legislative session when lawmakers turned to the sales tax.

Historically, it’s a place lawmakers have gone to when confronted with trouble. A decade earlier, amid mounting cries about low teacher pay, the Legislature and Gov. Dennis Daugaard raised the state’s portion of sales tax by half a penny in order to find additional money for teachers.

This year, it was property tax relief driving the conversation, with majorities in the House and Senate voting to set aside 0.3 percent of sales tax revenues next year when the rate resets to 4.5 percent. The $110 million generated by that 0.3 percent is set to be used to offset homeowner property taxes.