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South Dakota Needs More Money for Teachers


 How to generate more tax revenue without increasing taxes?

South Dakota lawmakers are trying to figure out how to generate more money for teacher salaries. The final report issued by the state's Blue Ribbon Task Force on Teachers and Students recommended the state have at least $75 million in new ongoing funding for teacher salaries. South Dakota has long suffered from a teacher shortage.

One idea is to increase the state sales tax rate by a half-cent, which would generate the required $75-$85 million annually. However, that proposal doesn’t appear to have much support and would require approval by two-thirds of both the House and Senate.

Another option is to cull some existing sales tax exemptions. Governor Dennis Daugaard (R) may introduce this idea during his upcoming State of the State address. His Fiscal Year 2017 Budget Recommendations contains a long list of current sales and use tax exemptions, which cost the state an estimated $971,003,109 annually.

In 2015, the governor vetoed two pieces of legislation seeking to create new sales tax exemptions: SB 159, An Act to exempt certain amateur sports coaches from sales and use tax; and SB 136, An Act to exclude certain municipal taxes from the gross receipts used to determine the tax liability for customers served by electric cooperatives and electric utilities. His veto message to SB 159 explained his position:

“Exemptions to the sales tax base, such as Senate Bill 159, erode the sales tax base and diminish a steady, reliable source of revenue for our State.  Senate Bill 159’s exemption benefits a select group and could lead to additional exemption requests in the future.  We must resist any attempt to erode the sales tax base and must work to keep the sales tax base as broad, and therefore as stable, as possible.” 

A similar sentiment was expressed in his veto message to SB 136.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.