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RAPID CITY, S.D. – Legislators returned home from their main legislative session of 37 days, with the only task left being Veto Day on March 27. The big discussion this year was tax cuts, and eventually a compromise bill passed to reduce general sales and use tax from 4.5% to 4.2% with a sunset in four years.
A sunset provision, or sunset clause, is a measure within a statute, regulation or other law that causes said legislation to cease to be effective after a specified date or time.
How did the 2023 legislative session go?
“We were there until about 7 p.m. last night [Thursday] until the general appropriations bill was done. And then we passed that back and forth between the two chambers and we did pass that. So we’re just waiting now for any governor’s vetoes,” Rep. Mike Derby (R-District 34), chairman of the House Appropriations Committee, said.
The last week is usually busy, how was it this time?
“Well, it is a busy week, but not a busy week for everybody,” Derby said. “I’m chair of appropriations, and so really this is the culmination of the whole session is this week for appropriations, where we have to take care of not only the supplemental bill, which is fiscal year ’23, but also the new general appropriations bill for fiscal year ’24. So we’re busy. There’s a lot of downtime, actually, for the rest of the legislators. Committees are done. They’re just waiting for us to produce a product and bring it to the floor.”
What did you feel was accomplished this year?
“Well, I would like to say that we did big things this year. Unprecedented, we had a robust economy, and so we were able to allocate some money,” Derby said. “For example, we did two things. One is a tax cut. And the other is we did an increase for what we call the big three; we reduce the general sales tax and use tax from 4.5% to 4.2, and that’ll be a $104 million reduction in sales tax. So that’s money into the pockets of the people, South Dakota.”
The big three increases were:
7% increase for K-12 and technical colleges, including a tuition freeze at technical colleges and public universities
7% increase for state employees, plus targeted employee pay increases
5% increase for healthcare providers, plus raise reimbursement rates for community based providers to 100% methodology
Derby said, “That’s a big deal. That’s about $30 million a year in ongoing money for those providers.”
How did the appropriations side of things go?
“I think it went better than it has in years, and I was very pleased with my appropriations team. We worked well with the Senate and we just kept going right up to the very end and it just went great. I’ve had a lot of compliments from even the lobbyists saying it went smoother than usual,” Derby said.
Special Appropriations:
“We did what’s called special appropriations and the supplemental bill,” Derby said. “These are one-time spending items, and this all falls into the fiscal year 2023 budget [until June 30].”
$70 million – Enterprise Resource Planning (state software)
$25 million – Motor Vehicle Software upgrade
$13 million – Sandford Underground Research Facility
$12.8 million – Public Health Lab (inflationary costs)
$5 million – Grants to fire departments for safety equipment
$1.325 million – Wildland Fire: Rapid City building
$1.2 million – Wildland Fire: Hot Springs building
$950 thousand – Black Hills Forest Plan support
“We’re quite happy with how the Black Hills and West River did in this overall budget with funding the Sanford Underground Research facility, the Wildland Fire grants, and also the Black Hills Forest Plan, which will help us be involved with the revision as that moves forward,” Derby said. “Basically what that did, it provided 500,000 to counties for a 1-to-1 match to work on that revision plan. Then it also freed up the state forester to help work for the next four years on this plan and then backfill his position. I feel good about it and it was big things for South Dakota and I’m very proud.”
How do you feel about the budget this year?
“This is unprecedented times. We’ve got a robust economy. We’ve got additional ongoing revenues in the tune of about $300 million a year,” Derby said. “So I want to thank Gov. Noem for setting the stage. We owe her a debt of gratitude. She was the one that proposed the tax cut in the first place of $100 million. We in the House just executed it slightly different than what she hoped. Hers wanted to completely reduce the sales tax on food. Ours is a broad-based approach which includes a reduction on the sales tax on food. So I think everything went great. We’ve had a record budget to generate about $7.4 billion this year for total overall budget.”
Are there any concerns about Gov. Noem possibly vetoing the budget?
“I don’t have any concern in regards to the general bill,” Derby said. “That’s for the ongoing running of government. I think there may be an opportunity she’ll look at vetoing our reduction and sales tax bill, but it’s pretty veto proof. In the House, for example, it passed 70-0. So it’s in a veto-proof situation right now.”