One day after Moving South Dakota Forward began airing commercials supporting a one-cent sales tax to benefit education and Medicaid, opponents of the initiative spoke out on opposite ends of the state Wednesday.
In Rapid City, Shawn Lyons of the South Dakota Retailers Association called the ballot measure "poor public policy" in a news conference.
"It seems to us this is exactly why we have a citizen Legislature," he said of funding decisions.
Initiated Measure 15, which will be on the November ballot, would establish a one-cent sales tax with proceeds split between K-12 education and Medicaid providers. Moving South Dakota Forward, a coalition of educators and health care representatives, estimates the tax would raise $175 million annually. Lyons puts the number at $180 million.
The measure is in response to $52 million in cuts to education made by the South Dakota Legislature in 2011 and a 10 percent cut in Medicaid reimbursement to health care providers the same year. Some funding was restored to education last year, but calculated against the initial cuts, it amounted to a .8 percent increase.
Locally, the Rapid City Area Schools Board of Education cut $4.3 million from its 2012-2013 budget and expects to cut another $4 million this year to manage the state funding losses. If Initiated Measure 15 passes, Rapid City Area Schools would receive about $4 million, said Rapid City Superintendent Tim Mitchell.
On Wednesday, Lyons said his grass-roots coalition believes IM15 to be the largest tax increase in history. Made up of 15 organizations, including South Dakota Farm Bureau, South Dakota Beer Distributors Association, South Dakota Trucking Association and South Dakota Coalition for Responsible Taxation, "No on 15" urges voters to rely on the governor and legislators to make appropriate funding decisions that are fair for every entity.
Lyons said voters should remember that IM15 is a permanent tax that gives money to only two areas. All areas of government have faced cuts, he said.
"We just don't think these groups should be treated any differently," Lyon said.
Andy Wiese, campaign manager for Moving South Dakota Forward, said although all areas have faced cuts, Medicaid and education — which make up about 80 percent of the state's budget — have been hit particularly hard.
"I think it's worth pointing out that with the drastic cuts of 2011 … those are ongoing cuts to education and Medicaid. Those aren't one-time cuts," Wiese said. "We saw Initiated Measure 15 as a long-term solution."
Lyons said "No on 15" members are also concerned about oversight.
Tax money from IM15 would go directly into a special Moving South Dakota Forward fund, where it would be split between the two entities. It would never go into the general fund, Wiese said.
Lyons argues that the special fund is part of the problem, allowing the money to be used with no legislative oversight.
But Wiese says IM15 contains "a lot of accountability." For instance, Wiese said, the school funding is designed to go directly to local school boards.
"To me, local control is the ultimate accountability," Wiese said. "It gives the local school district the ability to plan."
The Medicaid funding would be distributed directly to health care providers to compensate for cuts and freezes in Medicaid reimbursement, Wiese said. Once again, going to the individual providers who need the funding is control, Wiese said. And health care providers in the state badly need the additional funding, he said.
Dentists and health care providers faced a freeze in Medicaid reimbursement rates in 2010 and 2011, and a 6.4 percent cut in 2012, according to Paul Knecht, executive director of the South Dakota Dental Association.
As a result, dentists in South Dakota are currently paid only 58 percent of their costs for Medicaid reimbursed dental procedures. Knecht said the association calculated the percentage by looking at how dentists are reimbursed by the state's largest dental insurance provider, Delta Dental.
Dave Hewett, president of the South Dakota Association of Healthcare Organizations, said medical doctors are reimbursed 30 cents on the dollar for their Medicaid patient work.
As a result of the low reimbursement, doctors and dentists are being forced to limit their number of Medicaid patients, Knecht said.
"You can't make 80 percent of your practice Medicaid and survive," Knecht said.
The long-term result for South Dakotans will be people using emergency rooms for critical health issues rather than receiving preventive care, Hewett said. Since hospitals are reimbursed only 65 percent to 70 percent of their costs by Medicaid, they will be forced to shift costs to private payers, Hewett said.
In South Dakota nursing homes, where 50 percent of the residents are Medicaid recipients, the cost is definitely shifted to private payers, Hewett said.
He calls the shift "hidden taxes."
"These are embedded costs we will face now and into the future," Hewett said. As a result, the funding needs to go into the future as well, he said.
Lyons said "No on 15" isn't against all taxes but opposes taxes that unfairly benefit only two groups and circumvent the legislative process.
South Dakota Sen. Jeff Haverly, R-Rapid City, who opposes the tax, told the crowd Wednesday that "I have personally fought every tax increase that has come up."
Haverly said now is not the time to raises taxes in light of the economy and a federal government that is running out of money.
Jeremiah Murphy with the Coalition of Responsible Taxation said that as a third generation lobbyist, he has great respect for the state's legislative process.
"Let's take the discussion to Pierre," he said.
Wiese said allowing the state's voters to decide this issue is a good thing — a South Dakota thing.
"South Dakota has long been a champion in giving citizens a voice in their government" through the initiative and referendum process, he said. "When you're able to have that debate directly with people … I see that as nothing but a positive."
[A change was made to this story to reflect a correction. South Dakota Sen. Jeff Haverly, R-Rapid City, opposes Initiated Measure 16.]