Ballot measure planned if lawmakers don’t fulfill tax cuts

SIOUX FALLS, S.D. (AP) — A South Dakota conservative group plans to push lawmakers to fulfill a law calling for tax cuts after the state's U.S. Supreme Court victory this year clearing the way for major new online sales tax revenues.

But Americans for Prosperity-South Dakota has a backup plan if officials don't deliver: let voters decide in the 2020 election.

The organization backed by billionaire brothers David and Charles Koch is proposing a ballot question to simply phase in a half-cent sales tax cut over five years. The group wants lawmakers to pass the rate cuts, but the ballot question is a "fallback," State Director Don Haggar said Wednesday.

"I'm confident the legislature will honor their word," Haggar said. "We'll circulate petitions on the measure if the Legislature doesn't come up with a solution that we think ... keeps the commitment that they made in 2016."

The ballot question proposal comes amid ambiguity in a law requiring a 2016 half-cent sales tax hike for teacher pay to be scaled back if the state gained the ability to collect the tax on online purchases. Under the law, the state's 4.5 percent rate is to be rolled back by one-tenth of a percent for every additional $20 million the state reaps, with a floor of 4 percent.

It was ultimately South Dakota's case that led to the U.S. Supreme Court's decision in June to overturn two decades-old high court decisions that made it tougher for states to collect sales taxes for certain purchases online. The state began collections Nov. 1, but officials believe new legislation is required for the envisioned tax reductions to occur.

Haggar called the group's plan a "simple" solution, saying it would unhitch the rate cut from online sales taxes and simply phase it in over five years. The measure calls for a rate reduction of one-tenth of a percent each July from 2021-25.

Haggar said he's confident online sales tax collections will exceed the loss in revenues from the proposed tax cut. He said it would help the Legislature honor its word and potentially improve economic growth.

Americans for Prosperity-South Dakota said in a statement that the group is marshaling activists across the state and urging lawmakers to keep their pledge.

"If the Legislature isn't able to come up with a solution ... this session, or if they decide, 'Oh we've changed our minds and we want to spend this money,' well we won't hesitate to put this on the ballot," Haggar said.

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