PIERRE, S.D. (AP) - A measure to allow municipalities to temporarily collect up to an additional cent of sales tax for infrastructure projects fell victim on Friday to concerns about hiking taxes, even though supporters said it would help communities thrive.
The House State Affairs Committee voted 7-6 to defeat the proposal, which would have required voter approval before a tax hike could be imposed. Opposing lawmakers argued that the Legislature is already considering revenue increases for transportation funding and said new taxes would harm South Dakota’s business-friendly climate.
House Majority Leader Brian Gosch questioned whether the hikes are necessary. Opposition group Americans for Tax Prosperity South Dakota argued the measure could have added more than $150 million in new taxes if every city implemented it.
“If I took money out of your pockets, I could do a landscaping project around my house,” Gosch said. “I don’t know that I need that, but maybe I want it, and so it’s kind of that discussion of need versus want.”
Supporters scoffed at characterizations that the new taxing authority would lead to such a large hike and urged lawmakers to understand municipalities’ needs. Mark Lee from the Sioux Falls Area Chamber of Commerce said voters would have to sign off on tax increases for specific projects.
Representatives from cities across the state highlighted adding more parking in a tourist hotspot to road projects to required airport renovations as examples of projects that could benefit from the bill.
Republican Rep. Scott Munsterman, a former Brookings mayor who is sponsoring the proposal, said the measure would give cities another tool for that type of necessary construction.
“I’ve been known to say that next to a mayor’s spouse, the sexiest thing to a mayor is water and sewer because it lays the infrastructure for a community to develop and to grow and to prosper, and that’s what we’re asking,” Munsterman said.
Yvonne Taylor, executive director of the South Dakota Municipal League, said cities weren’t looking for a state handout but instead to take control at the local level - and only if the voters approved it.
“We call it the perfect bill,” Taylor said after the vote. “I’m sure I’m going to go out and explain (the defeat) to people this spring when we do our legislative update, and they’re going to go, ‘but why?’”
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