Senate Report by Bryan Breitling
2023 Legislative Session Review
WOW! What a busy and exciting nine weeks of the 2023 South Dakota Legislative Session! We were able to accomplish many good things for South Dakota this year.
For starters, operationally, we were able to provide a seven percent increase for state aid to schools. This will help keep more teachers in South Dakota and keep this very important industry competitive with non-education occupations.
We were also able to provide a seven percent increase, plus some additional targeted dollars for state employees. Over the years, we have seen more vacancies in critical state job positions. These two wage packages will help the state provide the critical services needed for our great state.
We were able to provide a five percent increase for medical providers, plus some targeted dollars for specific provider groups. There are Medicaid dependent services that will receive the targeted dollars up to 100% of methodology – which means they will be paid close to their approved costs. In the past, we have typically paid up to 90% of methodology, but those critical care providers were falling farther behind in recruiting and supply costs, so this year’s boost will provide much needed support to get these providers stable for the coming year. In addition, the non-Medicaid dependent services also will see the boost from Medicaid Expansion, which will increase the volume of patients in their service areas, thereby providing an incentive to those services as well.
This last week of session saw a lot of debate about the tax cut. What was negotiated on the last day of session, was an overall sales tax cut from 4.5% to 4.2% beginning July 1. This sales tax cut does have a sunset in four years, so we can expect this discussion to occur at that time as well. The importance of the tax cut sunset, is because the state revenues have been riding an economic high, and a short term tax cut makes sense, but mortgaging our future until we know the new normal is not fiscally responsible. Some examples include the federal stimulus bubble we have been on the last several years and expect it to continue for a little while longer, the last two years has had a Medicaid COVID enhancement that ends this year, the next two fiscal years have a Medicaid Expansion incentive, a new women’s prison opens and goes live in two years, and last, there is a ballot initiative to reduce the grocery tax at the next election. So, making the current tax cut permanent was concerning with such an uncertain state economic future.
Other wins this session: we were able to pass SB41 – housing infrastructure loans and grants, SB16 – rail line rehab in northeastern South Dakota, tuition freeze at the universities and technical colleges, 100% tuition reimbursement for South Dakota National Guard members going to South Dakota colleges and universities, and updates to several software programs at the state that were “Brittle” and putting the state at risk. Additionally, there were several wins on election integrity; nine bills passed through the legislature on pre-election testing, voter roll cleanup, and post-election audits.
Some things that did not cross the finish line this year included the focus on eminent domain reform, county funding for regional jails, and funding for the dam at Hiddenwood Lake. I will take a few weeks to re-base, and then begin to look at ideas for legislative ideas to bring back next year or in future sessions.
We have one more day in our 2023 legislative session, Veto Day. So far, the Governor has vetoed four bills, so we will continue to be educated on those bills and have a discussion later this month before closing out the 2023 session.
As always, I can be reached at bryan.breitling@ sdlegislature.gov. I look forward to continued conversations!
House Report by Scott Moore
We completed our regular Legislative session on March 9, 2023, approving a tax cut while providing funding for state employees, public schools, increasing funding for Medicaid services along with approving a balanced budget. It would be nice to blow my own horn but as a freshman representative it was easy to observe the years of commitment and knowledge it took to get this all accomplished. With one hundred and five legislatures, the governor, and her staff, this is challenging but a process that works for the citizens of this great State.
These laws along with agency and state budget are a solid road map that was started years ago and which the current legislatures continue to build on. We have had, and continue to have, a strong rural economy, state economy, and with some strong leadership locally, statewide, and nationally we should continue to prosper and grow. South Dakota economy may vary up or down, but we usually don’t get the crazy swings that are seen on our east and west coast. We live a modest life and usually within our means.
If legislation is signed by Governor Noem, the sales tax will be cut from 4.5% to 4.2%. This is on everything from clothes, groceries, school supplies, building materials and the list goes on. This cut will total over $100 million dollars per year, and is a start, to keeping a promise, to the South Dakota tax payers when the tax rate went from 4% to 4.5% in 2016. A cut in unemployment taxes of $18 million also passed in legislation.
Scholarships and tuition were part of many conversations during legislation this legislative session along with workforce development or shortage of workers. I would encourage you as a parent, aunt, uncle, or grandparent to reach out and encourage our most valuable assets, the young people of this State, to get an education and stay in South Dakota. We need a work force, a young work force and with just a simple gesture and some encouragement, we can help keep our young home-grown future leaders here within the State.
Voter integrity was also a topic early in legislation and several bills were passed to help clean up voter registration, requirements for testing ballot counting machines and a post-election audit. Our county auditors are our election managers and along with a new Secretary of State I believe we need to give her and her office some time to work with our auditors to make sure everyone is comfortable with the voting process. Good solid information and education on all steps of elections from registering to vote to counting the ballots are essential to keeping election integrity. At local, state, and national levels we must have confidence in the election process to be successful.
Finally, this legislative body had many discussions and passed bills pertaining to some of our most vulnerable. Our elderly, who deserve respect and may need some assistance to live out their final days or years. Those with mental illness, young and old. This issue isn’t going away and we as citizens of South Dakota need to figure out how to change our social behaviors, no amount of money can change this. I’m no doctor but I believe kids need less electronic devices and more time outside being kids and spending time with family and friends. Only grownups and parents can make these changes. South Dakota is full of opportunities with playgrounds and outdoor adventures. I said earlier, kids are our greatest assets, we need to give them encouragement and opportunities to be successful.
We will be back in Pierre on Monday, March 27 for Veto Day. This is when both the House and Senate will vote to concur or oppose Governor Noem’s vetoes. South Dakota should be proud of the work that is completed by all three branches of government. I believe everyone stayed positive and productive during the session.
House Report by James Wangsness
Now in the final week of session, the Legislature worked hard to pass the last bills and hammer out the differences between the two chambers on different bills.
Some of the biggest debates between the chambers was on the details on the tax cuts. House Bill (HB) 1137 was brought forward to create the biggest tax cut in the state's history, cutting the sales tax on everything from 4.5% to 4.2%. Most of the differences were on the exact amount and whether to add a sunset clause. Conference committees were formed to iron out the differences and ultimately decided on including a four-year sunset clause. On March 9, the tax cuts passed the House unanimously to resounding applause. The Senate passed it thirty-one to two.
One bill that failed to pass was Senate Bill (SB) 40. SB 40 originally changed how the Lieutenant-Governor and other statewide elected officials were nominated. The bill proposed having the Lieutenant-Governor chosen by the Governor and other statewide offices chosen by direct vote of the people instead of a party convention. But after much controversy in both chambers, it was amended in the House to only affect the Lieutenant-Governor. However, when SB 40 returned to the Senate to concur on the House amendment, the decision was to not concur and not appoint a conference committee to work out the differences. This decision effectively killed the bill.
Another bill that ultimately failed was HB 1109, which would modify the occupation tax for business improvement districts. The changes were to give the local governments more control on business improvement districts and increase the maximum amount taxed from transient guests lodging at South Dakota lodging establishments. After passing both chambers, Gov. Noem vetoed the bill saying that it raises taxes. On March 7, the House debated on whether to override the veto. Rep. Drury argued that increasing the tax limit does not directly raise taxes and that the Legislature should trust the local governments. HB 1109 ultimately failed, receiving only 41 yea votes when 47 was needed to override the veto.
The 2023 legislative session now comes to an end, with just one more day on March 27 for the Legislature to vote whether to override any of Gov. Noem's vetoes. Some of the major accomplishments of the session is the lowering the sales tax by over one-hundred million dollars, large strides in college affordability by expanding merit-based opportunity scholarships and keeping tuition low, improving the safety of South Dakotans through raises and better equipment for law enforcement and public safety workers, workforce development with funds to encourage available and affordable housing for workers, significant improvements to election integrity by adding post-election audits and better security for drop boxes and voting machines, and meeting the obligation to take care of people by more spending on nursing homes, mental health institutions, and faithfully implementing Medicaid expansion. Ultimately, spending for teachers and schools increased by seven percent, state employees by seven percent, and Medicaid providers by five percent.
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