South Dakota $423M surplus will be top issue at Legislature

January 9, 2023 GMT
FILE - South Dakota Gov. Kristi Noem takes part in a panel discussion during a Republican Governors Association conference, Nov. 15, 2022, in Orlando, Fla. The South Dakota Legislature’s nine-week session is slated to begin Tuesday, Jan. 10, 2023, with all eyes on what lawmakers might do with the state’s $423 million surplus. Noem wants to use the money to cover repealing the state sales tax on groceries, a plan some of the state’s staunchest Republicans oppose. (AP Photo/Phelan M. Ebenhack, File)
FILE - South Dakota Gov. Kristi Noem takes part in a panel discussion during a Republican Governors Association conference, Nov. 15, 2022, in Orlando, Fla. The South Dakota Legislature’s nine-week session is slated to begin Tuesday, Jan. 10, 2023, with all eyes on what lawmakers might do with the state’s $423 million surplus. Noem wants to use the money to cover repealing the state sales tax on groceries, a plan some of the state’s staunchest Republicans oppose. (AP Photo/Phelan M. Ebenhack, File)

The South Dakota Legislature’s nine-week session is slated to begin Tuesday with all eyes on what lawmakers might do with the state’s $423 million surplus.

Gov. Kristi Noem wants to use the money to cover repealing the state sales tax on groceries, a plan some of the state’s staunchest Republicans oppose. Lawmakers also could revive a $200 million plan to cover utility infrastructure for new housing developments.

Debate over tax cuts and prison spending are also likely to occupy lawmakers’ attention. Here’s a look at some of the biggest questions the Republican-controlled Legislature will have to grapple with over the next nine weeks:

—Tax cuts. Noem’s executive budget calls for repealing the state’s 4.5% sales tax on groceries, a move that would save taxpayers $100 million. Noem has argued that the state’s surplus would cover the revenue loss. She has called repealing the tax her top priority for 2023. Minority Democrats support the idea but a number of staunch Republicans oppose it, questioning whether the state can absorb the lost revenue. Democratic Sen. Reynold Nesiba of Sioux Falls plans to introduce two back-up plans. One calls for reducing the sales tax on groceries by a cent, the other by 2 cents.

A property tax cut also could be in the mix. Sen. Jack Kolbeck, a Sioux Falls Reublican, told the Argus-Leader newspaper that a proposal to drop home assessment values by $100,000, allowing the owner to pay lower taxes, is in the works.

—Workforce housing. Lawmakers are looking to alleviate the state’s worker shortage. They’re considering resurrecting a $200 million plan to cover utility infrastructure costs for new housing developments, in turn supporting more affordable housing for workers.

The plan stalled last year and its prospects look uncertain this time around after Republicans voiced concerns that the state could open itself up to lawsuits if the funds are misappropriated.

—Licensing. Legislators are looking to update licensing requirements for professional jobs and creating scholarships for students planning to become mental health professionals.

—Prisons. Noem wants to use $86 million in the state’s Incarceration Construction Fund to build a new 300-bed, $60 million women’s prison in Rapid City. She also wants to spend $52 million on a new men’s prison in Sioux Falls to replace the South Dakota State Penitentiary, which has been operating since 1881. She wants to use $27 million from the incarceration fund and $25 million from state general funds to cover the project.

—Public employee raises. Noem’s budget calls for giving public workers, teaches and health care providers a 5% raise. Nesiba wants to bump that to 8%.

—Juvenile justice. Lawmakers are considering bills that would revise when a juvenile offender can be committed to the state corrections system and when a school is notified about a student suspected of drug or alcohol violations.