South Dakota Looking to Sales Tax to Fund Education and Medicaid

Moving South Dakota Forward, has provided a draft version of a ballot initiative to move the state sales tax from the current rate of 4% to 5%. The proposed use of those funds would be to split “…the additional revenue between K-12 education and Medicaid services. The group is a coalition of public schools and health care providers.”

The measure’s wording was approved by South Dakota Attorney General Marty Jackley. The measure requires Moving South Dakota Forward to collect 15,855 petition signatures by November 1 of this year in order for the measure to be placed on the November 2012 ballot.

This action may be in response to the Legislature’s actions in March. They “…reduced per-student K-12 funding by 6.6 percent and cut reimbursements to Medicaid providers by 4.5 percent to 11.5 percent, while cutting other agencies by 10 percent.”

David Hewett, president of the South Dakota Association of Healthcare Organizations said, “South Dakota doesn’t have the necessary revenue sources to sustain the basic services in K-12 public education and Medicaid funding.” He goes on to say that he doesn’t know that there’s ever a good time to propose a tax increase “…but I think people fully understand the necessity of maintaining basic services at the state level. And I think that was made all the more clear during the last legislative session.”

Many states are reducing exemptions and increasing products and services that are taxable in order to regain control of their struggling budgets and ensure services continue within their state. South Dakota is no exception. In July, 2011, the Sales Tax Review Committee met to discuss repealing a number of sales tax exemptions for retailers.

NOTE: As of the date of this blog (Tuesday, September 6) the Move South Dakota Forward measure is not listed on the South Dakota government website list of current active measures being circulated for signatures.