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Foes of South Dakota tobacco tax hike initiative mobilize

September 2, 2018

SIOUX FALLS, S.D. (AP) — Opponents of a ballot question that would increase South Dakota tobacco taxes to make state technical schools more affordable are mobilizing against the November voter initiative, arguing the measure lacks accountability and would harm small businesses and kill jobs.

Foes recently launched a “significant” television advertising campaign and volunteers are speaking to organizations to sign up new opposition coalition members, said Jason Glodt, grassroots director for South Dakotans Against Higher Taxes. Voters in the Nov. 6 general election will decide Initiated Measure 25, which would increase taxes on different tobacco products including a $1 hike per 20-cigarette pack.

“It hurts small businesses,” Glodt said. “It’s a $35 million tax increase on small businesses in our state.”

The state Legislative Research Council in an August fiscal document estimated the measure would raise revenues by a lower amount: about $25 million. House Speaker Mark Mickelson, the ballot question’s sponsor, said critics’ claims are inaccurate and unsubstantiated, arguing the measure would address tech school tuition that’s among the most expensive in the nation.

A report last year to a legislative panel found that South Dakota’s tech institutes charge the highest average resident fees and tuition regionally. The new ballot measure would create a fund to lower the tuition and fees, offer scholarships and provide financial support for the state’s four technical institutes.

“We can’t attract and grow the workforce that we need if kids can go to Nebraska for half the price,” Mickelson said. “You look around, there’s a lot of ‘help wanted’ signs.”

Mickelson said the measure enjoys support from industry and health care organizations, but said backers lack the money and experience of “Big Tobacco.”

“We’ve got our work cut out for us, but this is a good public policy measure because it’s good for South Dakotans,” he said.

Glodt said the opposition coalition includes the South Dakota Retailers Association, Americans for Prosperity and dozens of businesses across the state. South Dakotans Against Higher Taxes hasn’t yet revealed any donors in state campaign finance records.

Glodt said measure supporters claim the funding hike is for tech schools, but a large portion would go directly into the state general fund and there’s no protection against all of it getting diverted. The Legislative Research Council document estimates about $5 million of the increased revenues would go to the general fund, while $20 million would go to the technical institutes.

“There’s very little accountability or transparency or oversight within the measure, and it ignores other pressing educational needs,” Glodt said.

South Dakota’s cigarette tax is $1.53 per pack, according to the Tax Foundation, an independent tax policy nonprofit. State voters last approved a tobacco tax hike in 2006 with nearly 61 percent support.

Voters in neighboring North Dakota in 2016 rejected a ballot question that would have raised the state’s 44-cent cigarette tax to $2.20.

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