I want to express my sincere gratitude for your comments, support, and kind words throughout this session. I've received your phone calls, text messages, emails, and greetings in various settings – whether I was at church, a sporting event, or in the grocery store – and I truly appreciate knowing your thoughts and requests. It is an honor to serve District 24, and I value each and every one of you, regardless of whether we agree or disagree on the issues facing South Dakota.
In our pursuit to uphold traditional South Dakota values while fostering economic opportunity and prosperity, we sometimes encounter conflicting goals and differing opinions. Recognizing and accepting these realities is essential as we work together to shape a brighter future for our citizens, children, and grandchildren.
Undoubtedly, it was a challenging budget year. While I was mostly successful in achieving my goal of restoring funding to SDPB and the State Library, I was unfortunately unable to secure funding increases at or above the inflation rate for State employees, Education, and Community service providers. This past session marked my fifth, and it was the first time I encountered such a bleak financial situation. Revenues were lower than expected, while expenses, particularly Medicaid, increased. This prevented us from having positive discussions about investing excess revenues in key obligations and needed projects.
In hindsight, the legislature may have erred in 2023 when we passed HB 1137, reducing the state sales tax rate to 4.2% from 4.5%. The additional revenues from the previous rate are now missed. This reduction will sunset in June of 2027, at which point the sales tax rate will return to 4.5% unless further legislation is enacted.
To recap some winners and losers this legislative session, here are some memorable highlights and disappointments, based on my notes:
Positive Outcomes:
· Defeating HB 1186 that would have eventually defunded GOED’s Future Fund economic development promotion program.
· Securing funding for SDPB and libraries.
· Funding the graduate medical student assistance program.
· Approving the future water allocation permit for the Western Dakota Regional Water System.
· Passing SB 6 to support a new elementary school necessitated by growth at Ellsworth Air Force Base.
Disappointing Outcomes:
· Inability to add one-time money to the prison construction fund and secure guaranteed pricing for the project.
· Failure to increase funding for state employees, education, and community support providers.
· Passage of HB 1052, effectively halting the controversial CO2 pipeline project and its potential $1.35 billion investment in South Dakota.
· The introduction of 40 bills aimed at disrupting public education through measures like education savings accounts, classroom mandates, curriculum restrictions, teacher protocol, and religion into public education.
The discussion surrounding property taxes and their recent increases got into full swing last week. Three proposals reached the House floor, but only Governor's bill SB 216 received a positive vote. Understanding property taxes and how it relates to school, city, and county funding is one of the most difficult things I have encountered being a legislator. Terms like local need, assessments, and mill levies are central to any conversation about property taxes. Restrictions on local government growth further complicate the issues of "fairness" and "mandated spending." If there were easy solutions, we would have addressed rising property taxes long ago.
The Governor's bill, while well-intentioned, will not lower property taxes. It limits property valuation increases (county-wide) to 3% per year for five years. This may slow the growth of property taxes, but potential mill levy increases (valuations and mill levies are tied together to yield enough money to fulfill budgets) could counteract this effect. As I mentioned, this is a complex issue. I anticipate a task force of legislators and representatives from the Bureau of Finance and Management and the Governor's office will conduct a deeper analysis this summer to develop a more comprehensive solution than SB 216.
In my view, progress will require an additional revenue source (such as an increased sales tax directed to the school funding formula) and stricter limitations on school and local government budget growth. Additionally, economic development and investments in businesses that build structures would contribute additional economic activity and revenue, helping to reduce property taxes. It's also important to remember that the State of South Dakota does not collect or spend any property tax dollars.
Thank you again for reading these weekly updates and for your valuable feedback. As the 2025 session has concluded, I will be dedicating the interim to listening, learning, and researching positive initiatives that can be introduced in the next session to enhance opportunities for the citizens of South Dakota. See you on down the road and thanks again.
–mw