PIERRE -- The half-cent tourism tax won't expire on June 30 as scheduled - but it won't be lasting as long as Gov. Dennis Daugaard and many legislators wanted.

The state Senate voted 27-7 Tuesday to extend that tax until Dec. 30, 2012 - a change from the original language, which made the tourism tax permanent.

Sen. Ryan Maher, R-Isabel, made the motion to amend the bill. He was also the lawmaker who added the original sunset clause two years ago.

"I brought the sunset clause a few years ago, when we originally passed this, because I do not like it (the tax) - and I still do not like it," Maher said.

The tourism tax applies from June to September for "visitor-intensive businesses" such as souvenir shops or book stores if they receive at least half their business during those summer months. It also applies year-round to hotels, campgrounds, spectator events and some vehicle and equipment rentals.

In 2009, the tax was raised from 1 percent to 1.5 percent, with the proceeds of that tax increase going to fund both tourism promotion and cultural institutions in the state.

Because Maher set a December deadline rather than a June deadline, the 2013 Legislature will need a two-thirds vote to extend the tax - rather than the simple majority needed to amend or remove a sunset clause from an existing tax.

But House Bill 1248 still needs to survive a conference committee. The House of Representatives approved an unchanged form of the bill 64-3.

Supporters of the tourism tax argued that its revenue was vital to support both tourism promotion and institutions like the state Archaeological Research Center in Rapid City, which is funded by the tax's proceeds.

"Why would you want to kill the goose that lays the golden egg?" said Sen. Bruce Rampelberg, R-Rapid City. "Is it a tax increase? Maybe. But it's working. We pay a lot of taxes for things that aren't working."

Sen. Jeff Haverly, R-Rapid City, said he wasn't a big fan of the tax for tourism promotion but believes institutions like the archaeological center need another year or two of special funding.

"In the future, we may be able to fund this through general fund dollars like we did previous to 2009," Haverly said. "This should not be a permanent tax - but this is not the time to end it."

Some critics said South Dakota shouldn't fund tourism promotion with a special tax when education and health care are facing steep cuts.

Others criticized the burden of the tax.

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Maher argued that South Dakotans pay a significant portion of the tax, rather than it just falling on tourists as the term "tourism tax" implies.

Daugaard pushed hard to make the tourism tax surcharge permanent, which he said was a good thing for the state.

A spokesman for Daugaard did not return a call for comment Tuesday afternoon.

 

Contact David Montgomery at 394-8329 or david.montgomery@rapidcityjournal.com

 

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