RAPID CITY, S.D.– A lot happened last week in Pierre, including the grocery tax repeal, which was instead replaced by a general sales tax cut for everyone in the state. As the legislative session gets closer and closer to ending, District 34 Representative and House Appropriations Committee Chair Mike Derby explains more about what he has in store to prepare for 2024.
Sales Tax Cut
The sales tax cut was one of three decisions that legislators had to choose from, which also included the elimination of the grocery tax or giving residents a property tax credit of $300. Considered to be the largest tax cut in state history, the number went from 4.5 down to 4.2 percent and is estimated to save an average person just under $120 a year or $10 a month. “That was the easiest to implement,” Derby explains. “And it got rid of an amendment that was attached six years ago called the Partridge Amendment that tied reductions [and] future reductions to the collection of sales tax on remote sales.” And while it may not sound like much of a savings at first, Representative Derby explains that there is room for further tax cuts in the future. “Originally, about six years ago, it went from 4.0 percent to 4.5. So as the economy grows and we believe it will grow, even though we use conservative numbers for our revenue setting, there will be opportunities that future legislators can take a look at lowering that to 4.1 or back to 4.0 percent.”
What is left for 2023?
Currently, the state is looking to spend one-time funding before the fiscal year ends on June 30 on projects that Representative Derby says require only a one-time deal, followed by using ongoing revenues in the following year’s budget. “We passed out of the House a $70 million state software upgrade and update, along with a $25 million motor vehicle software update,” he explains about the one-time funds. “We are operating on some systems that are almost 30 years old in state government, and it is really, really time.”
2024 fiscal year
For the 2024 fiscal year, three ongoing revenue sections remain at the top of Derby’s list: full reimbursement for school Medicaid providers, re-examining tuition costs set by the board of regents, and Medicaid expansion. Medicaid Expansion, he says, is something that remains unknown at this point, with any action to be taken relying on the number of people that sign up for the program ahead of its July 1 deadline. ”
“We do not know how many people–I think it is going to ramp up over time,” Derby said. “I know the state of South Dakota is budgeting for a little over 50,000 people to enroll right away. That’s what we’re trying to look at.” Based on what the numbers are will determine how they can budget for the new enrollments.
Most importantly, however, Representative Derby is hoping for a balanced budget once the dust settles. “There will be many long days and nights ahead of us, but we will get it done and there will be some people that are happy and some that are unhappy. But it’s part of the process.”