A Senate committee has shelved a half-penny sales tax plan tied to homeowner property tax relief — at least for now.
The Senate State Affairs Committee voted 5-4 Monday to send Senate Joint Resolution 507 to the 41st day. That usually ends a bill for the year. Senators can still bring it back, but it takes a deliberate push.
SJR 507 is sponsor Sen. Amber Hulse’s attempt to move part of the property tax conversation onto the sales tax base. Her plan would ask voters to set the state sales and use tax at 5 percent. The current rate stands at 4.2 percent and is slated to increase to 4.5 percent in 2027. Hulse said the extra half penny would go into a homeowner tax reduction fund, aimed at buying down school mill levies on owner-occupied homes.
Hulse estimated the half penny would raise $260 million to $280 million a year.
Amendment stripped the formula
Before the final vote, the committee adopted amendment SJR 507A. It removed the distribution formula from the original resolution. The revised version kept the main idea: dedicate the half-penny revenue to the homeowner fund.
SJR 507 would submit a statutory change to voters at the next general election. It would not amend the constitution.
Hulse: “For half a penny, let the people decide”
Hulse argued that property taxes rise with home values that homeowners can’t control. Sales taxes work differently, she said.
“If we truly believe under God the people rule, then we shouldn’t be afraid of their verdict. For half a penny, let the people decide,” she said.
Hulse also said visitors would share in the cost. She told lawmakers roughly one in six sales tax dollars comes from out-of-state buyers.
Sen. Randy Deibert, R-Spearfish, supported the plan. He said some Black Hills districts receive no state aid for education and cited polling he said shows tourism-heavy areas prefer sales taxes over property taxes.
Revenue: “A statewide solution” to a local issue
Jason Evans of the South Dakota Department of Revenue said property taxes are largely local, and the proposal spreads the impact statewide. “
This resolution offers a statewide solution to that primarily localized issue,” he said.
Nathan Sanderson, executive director of the South Dakota Retailers Association, urged lawmakers not to add another tax question to the ballot.
“We got a lot of stuff on the ballot. We don’t think that we need to add any more on the ballot,” he said.
Sen. Chris Karr, R-Sioux Falls, raised the cost on big purchases. He used a $2.5 million combine package as an example. A half penny on that, he said, adds $12,500.
“That’s not insignificant,” Karr said.
Opponents said lawmakers should keep working on property tax relief in Pierre, rather than sending a sales tax increase to voters.
What’s next
The committee’s vote puts SJR 507 on the shelf. It can still be revived on the Senate floor, but absent that move, it’s expected to stay put this session.
