56% and 60%: South Dakota counties vote down new sales tax

South Dakota residents in two counties voted Tuesday to reject new half-percent sales taxes that would have funded reductions in property taxes. The measures failed in Brown and Codington counties, the first jurisdictions to hold public votes on the new revenue mechanism.

State lawmakers and Governor Larry Rhoden granted counties the authority to impose these local sales taxes during this year's legislative session. This is the first time in state history that counties have had this specific power. The proceeds from these taxes are strictly limited to lowering homeowners' property taxes. Lawmakers and the governor also decided to use revenue from a planned increase in the state sales tax rate, from 4.2% to 4.5%, to reduce property taxes for homeowners statewide.

County commissions in at least seven other jurisdictions have already adopted similar sales taxes without putting them to a public vote or facing a referendum. In Brown County, commissioners chose to place the tax on the ballot. In Codington County, residents gathered enough petition signatures to force a vote. According to unofficial results from the Secretary of State’s Office, 56% of Brown County voters opposed the measure. In Codington County, 60% voted against it.

Shelly Alvine, a Codington County resident who helped lead the petition drive, described the result as a “nice outcome.” She noted that voters were “voting with their pocketbook” due to inflation straining household budgets. Alvine called the rejection “decisive” and pointed out that renters would pay higher sales taxes without receiving the benefit of lower property taxes. “If you could look a person in the eye and ask them for $50 to pay for your property tax, that’s what you’re asking them to do with this sales tax,” Alvine said.

Alvine suggested the results should encourage other counties to pause before pursuing similar taxes. She also urged the Legislature to find more equitable ways to provide property tax relief. “I think that’s a good reason for the Legislature, before passing off their decisions on South Dakotans and the counties, to look for other ways to make property tax relief more equitable,” Alvine said.

Special elections are scheduled for Nov. 17 in Clay and Charles Mix counties, where voters will decide on their own sales tax proposals. Governor Rhoden’s office responded to the results in a statement. “My plan to cut property taxes empowers South Dakotans to choose what works best for their county,” Rhoden said. “And people in different counties will make different choices, that’s why we left all options open to refer and initiate these measures.”