Gov. Kristi Noem signs bill to temporarily lower South Dakota's sales tax rate

After weeks of heavy critiques on legislation that would temporarily lower the overall sales tax rate for four years, Gov. Kristi Noem signaled her approval of HB 1137 by signing the bill Tuesday.

It's the largest tax cut in state history and returns $104 million to South Dakota tax payers. The news also comes a day after Noem signed the 2024 state budget into law to the tune of $7.4 billion.

Any kind of tax relief was a priority of the Legislature during the 98th Legislative Session. The House of Representatives, led by Majority Leader Rep. Will Mortenson, R-Pierre, wished to see a broad-based tax cut.

Through Rep. Chris Karr's proposal, the overall sales tax rate will be lowered from 4.5% to 4.2%. During negotiations with the Senate, a sunset clause was added to have the tax cut expire in 2027.

Additionally by approving HB 1137, the 2016 Partridge Amendment will be removed from state law.

Noem called the temporary cut "a tax holiday" and in her letter to lawmakers explaining why she signed the bill.

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"It is clear they wish to raise taxes again in the near future, and the method through which they have written this legislation allows them to do so without ever having to take another vote," Noem wrote.

She continued to advocate for cutting the overall sales tax on groceries, a priority that was swiftly dismissed by lawmakers despite repeated attempts to get it through either the Senate or the House. Noem recognized that by lowering the overall sales tax, South Dakotans would be getting some kind of temporary help.

"Public sentiment has shown that South Dakotans want a permanent tax cut," she wrote. "The legislature has failed in that regard, but I promise to continue to work with them in the future to do what is right for our state."

Karr, R-Sioux Falls, told reporters in early March after the Legislature had approved of lowering the overall sales tax that he hoped to come back in 2024 and remove the sunset clause.

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"I thought that [the two-year sunset] creates way too much market disruption out there, especially in our business climates," Karr said at the time. "We can keep talking about the sunset in the future."

Mortenson said in a statement Tuesday that he expected the House would fight to remove the sunset clause in 2024.

"The bill wasn't exactly what we wanted, it wasn't exactly what she wanted, and it wasn't exactly what the Senate wanted, but legislating is a team game," he said. "It is prudent and sustainable."

HB 1137 goes into effect on July 1.

Lawmakers return to Pierre Monday for Veto Day to override any vetoes the Governor issued in the last two weeks.

This article originally appeared on Sioux Falls Argus Leader: Gov. Noem signs bill to temporarily lower the South Dakota sales tax