Last Tuesday in the Governor’s State of the State address, the biggest item of interest was his suggestion that the state sales tax be increased by half a cent, to boost teacher pay across South Dakota.
South Dakota first implemented a sales tax in 1935, at two percent. Four years later, the state instituted a use tax at two percent. The sales and use tax increased to three percent in 1965, and to four percent in 1969. It has remained at four percent for the past 47 years, except for two temporary increases to five percent – one in 1980 to buy railroad property, and one in 1987 to establish the REDI fund.
The sales and use tax is the bedrock of the state’s General Fund, contributing about 60% of total General Fund revenues. This year, the sales and use tax is projected to contribute about $873 million to the state’s coffers. The governor’s staff projects that a half-penny increase in the sales and use tax would generate over $107 million in annual revenue that could be used to increase teacher pay and reduce property taxes. As outlined by the Governor, about $62 million would be used to increase teacher salaries to an average of $48,500 (the current average statewide is $40,023), and another $5 million would be used for teacher mentoring programs and distance learning. The remaining $40 million would be dedicated to property tax relief, applied to all classes of property at the same ratio as the general education levies.
The teacher pay plan was outlined in a four-page memo from the governor. We will be learning more about the specific details of this plan in the coming days, including ways to ensure accountability among schools that the money is being directed to teacher salaries and not being diverted to other uses.
Other highlights of the State of the State address included his announcement that Lt. Governor Matt Michels will be leading an in-depth examination of the internal controls used to monitor organizations that administer state grants and programs. He is also proposing a new state park in Spearfish Canyon, changes to the State Pension Plan, and ongoing workforce development efforts.
The annual Tourism Conference is this week, with the theme “Be Monumental.” The Mount Rushmore Society is celebrating the 75th anniversary of the completion of the monument. In addition, 2016 marks the 100th anniversary of the National Park Service.
As the legislative pace picks up, you can find complete information online at the Legislative Research Council website: legis.sd.gov.
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