South Dakota lawmakers address workforce needs as Gov. Noem pitches tax cuts in legislative session

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Workforce needs, the budget and tax cuts will be on the minds of South Dakota lawmakers when the Legislature convenes Tuesday for a two-month session.

Republican Gov. Kristi Noem will address the GOP-controlled Legislature on the session's opening day. Last month, she presented her vision for the budget to the Legislature, and now it's up to lawmakers to craft a plan for the next fiscal year, among other measures.

Republican House Majority Leader Will Mortenson said South Dakota's short session — 38 days spread over about two months — "helps keep us focused on only the most important topics."

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"I tell my caucus often that our only two jobs we absolutely have to do are passing a budget and getting the hell out of there," Mortenson said.

Republican majority leaders largely support Noem's agenda, in part because of South Dakota's strong finances. State revenues have exceeded the Legislature's 2023 forecast by 11%, or $115 million, from July through November, the first five months of the fiscal year, according to a state Bureau of Finance and Management comparison.

Republican priorities are new prison construction, college affordability, workforce needs and the sustainability of long-term care in rural communities. They expect to be working with less money after years of COVID-19 pandemic-era federal aid.

Democrats are focused on child care needs, pre-K education and teacher pay.

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Noem has emphasized a lean budget amid rising inflation, proposing a nearly $7.3 billion plan for fiscal year 2025. She called for 4% increases for the state's "big three" priorities of K-12 education, health care providers and state employees.

Budget writers will review the 4% proposal in the context of the entire budget, Mortenson said.

"I was encouraged that the governor focused the vast majority of our ongoing dollars on core priorities," he said.

Noem also has proposed making a temporary sales tax cut permanent. The four-year reduction was approved in 2023.

Republican state Rep. Chris Karr has filed a bill to make that change, citing years of state revenue surpluses.

"Government collects taxes to provide certain services. When those services are provided, any excess dollars should go back to the people because that's who it belongs to," Karr said. Sales taxes are the main driver of South Dakota's state revenues.

Mortenson predicted House Republicans will coalesce around a permanent sales tax cut.

Senate Majority Leader Casey Crabtree said Senate Republicans will consider other potential tax cuts, possibly including property taxes.

"I think the conversation is what do we cut and how much do we cut going forward," he said.

Workforce needs loom large, Mortenson said. South Dakota has more than 20,000 job openings advertised online and had a 2% unemployment rate as of November 2023, according to the state Department of Labor and Regulation.

Mortenson also sees college affordability as "absolutely critical for our state’s future," to keep young people in South Dakota and attract others from out of state.

Democrats, who hold 11 of 105 seats, are pursuing bills "that really directly help working-class people," Senate Minority Leader Reynold Nesiba said.

He listed proposals to lengthen the period for people to file a worker compensation claim if injured at work, and to incrementally raise the minimum wage to $15 an hour, as voters did in neighboring Nebraska in 2022.

Advocates for LGBTQ and voting rights expressed concern about possible lawmaker actions.

Samantha Chapman, advocacy manager for the American Civil Liberties Union of South Dakota, called recent legislation restricting gender identity a "misuse of the way our government is supposed to work, to constantly be passing bills that are clawing away at a small portion of our population's rights."

Crabtree said that when discussions of those issues arise, "you're going to see common sense prevail."

Dakotans for Health co-founder Rick Weiland said he is leery of the Legislature potentially trying to raise the bar for ballot initiatives, citing a defeated 2022 measure that sought to require 60% of voters to support certain spending or tax measures for the initiatives to pass.

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Republican state Rep. Jon Hansen, who sponsored the measure, said in a 2021 floor session that certain money issues deserve more support than a simple majority vote.

"I think each and every time they try to mess with the will of the voters and direct democracy, they get themselves in trouble," Weiland said.

He is leading efforts to put two measures on the 2024 ballot: one to place abortion rights in the state constitution, and another to repeal the state’s grocery tax.

South Dakota outlaws all abortions but for life-saving circumstances. Weiland called it the most extreme abortion law in the country. Noem campaigned for reelection in 2022 on repealing the grocery tax, but the Legislature went a different route with the temporary sales tax cut of $104 million annually.

Noem is in her second term as governor. Once seen as a potential 2024 presidential candidate, she has embraced former President Donald Trump's reelection bid, endorsing him at a rally last year.

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