Noem pulls support for grocery tax measure over jeopardized tobacco money

A citizen-led campaign to eliminate South Dakota’s state grocery tax through a measure on the 2024 ballot won’t have the backing of Gov. Kristi Noem’s administration despite earlier indications she would support it.

The sticking point is concern expressed by Attorney General Marty Jackley in his official ballot explanation. The measure would prohibit collecting sales tax on “anything sold for human consumption.” That might include tobacco, which could impact revenue the state receives from a master settlement agreement with the tobacco companies. Jackley says South Dakota receives about $20 million annually from the settlement.

His ballot explanation also notes that the measure’s wording could impact revenue received from the streamlined sales tax agreement, a cooperative effort of states, local governments and the business community to standardize the collection of sales and use tax.

Jim Terwilliger, the governor’s budget director, told News Watch that these concerns distinguish the citizen-led effort from Noem’s much-publicized campaign pledge to repeal the state’s 4.5% grocery tax. State lawmakers rebuffed that proposal. Terwilliger says the language from the governor’s proposal during session did not have these issues and is the better direction for the state.

The petition effort is being led by Dakotans for Health. The group’s founder, former Democratic U.S. Senate candidate Rick Weiland, told News Watch that he would welcome Noem’s support and even mused about the Republican governor signing the group’s petition. During the legislative session, Noem said she would back the citizen-led grocery tax measure if the Legislature failed to pass her bill.

Stu Whitney
South Dakota News Watch

May 19, 2023