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.]

Contact Lynn Taylor Rick at 394-8414 or lynn.taylorrick@rapidcityjournal.com

(24) comments

larain140

Initiated measures are the best form of direct-democracy that we have at our disposal. Taking this to Pierre to be put through the ringer of the legislative process overcomplicates the language of the proposal and puts the funding at risk of falling through the system of loopholes, and right into the general fund. How are we forcibly taking money from our fellow citizens if more than half of us vote "yes" on IM15 anyway?

Many are tackling this tax as regressive as well. Yes, flat taxes are regressive. However, those whom are contributing a greater proportion of their income and spending (i.e. low-income households) would seem to be the ones whom would be benefiting the most from increased funding for Medicaid. If healthcare providers see less of a loss in dealing with Medicaid patients, it seems that they would be willing to increase the number of Medicaid patients that they offer services to. Flexibility in choosing primary-care providers and receiving preventative care on a regular basis is a good thing.

Deklan
Deklan

If a certain percentage vote yes on M15 and it passes, then the enacted increase in sales tax would be forcibly taking money from the percentage who voted no.

The low-come households may or may not benefit from increased funding for Medicaid, but M15 would cause them to pay a larger sales tax for life essentials.

Last year, an analysis of the Census data showed 51 million people with incomes less than 50% above the poverty line. It was 76% higher than the official number which meant one in three Americans were either in poverty or just above the federal poverty level.

Basically, a sales tax increase would not just affect low-come households, but those barely above the poverty level…

Additionally, since the beginning of ’09, median household income has fallen roughly 8%, insurance rates have risen, gas prices are up nearly 30¢ from a year ago, and increasing consumer prices are wrecking household budgets.

Many areas of South Dakota government have been cut, and special interests shouldn’t gain at the expense of the state's citizens, many who are monetarily constrained.

Moreover, there are many uncertain economic variables, including a $16 trillion federal debt, and a looming federal fiscal cliff. Now isn’t the time to raise sales tax with an unknown economic future.

larain140

Yes, and electing a president with a majority vote "forcibly" puts constituents under the rule of someone they disagree with and didn't vote for. That's how democracy rules, as a majority.

Deklan
Deklan

It’s about a special interest group and its supporters wanting to tax the labor of others to profit their special interest(s).

Deklan
Deklan

The RCASD budget is more than the budget for Rapid City and Sioux Falls.

05/04/12 the RCASD approved an $183,208,122 budget for school year’12 -’13. Last year’s student count was 13,671.

Sioux Falls School District with a student count of 24,000 has tentatively approved $131.4 million for its’13 budget.

Mayor Kooiker submitted a $136.7 million budget for Rapid City.

South Dakotans who vote yes on Initiated Measure 15 are in consent of forcibly taking money from their fellow citizens.

Reallyreally

Deklan, I can see that you are looking at this purely based off of numbers. I challenge you to step foot in any of our public schools and spend the day there. You will see the injustice that is happening to our teaching staff and intern their students. This nation is bad enough about with the lack of respect for teachers. but on top of that we pay them poorly. I will gladly support any bill that leads to a better future for my children and grandchildren.

Jim Stewart
Jim Stewart

If teacher pay is a measure of successful schools then the Chicago school system is the best in the nation.

Deklan
Deklan

The multi-million dollar budgets, the increase in staff, student enrollment, unsustainable pension plan, and SB 49 cannot be left out of the conversation…

I see you gave the standard rationale, “You will see the injustice that is happening to our teaching staff and intern (sp) their students.”

In other words, raising the sales tax must be done for the teachers first and then for the children.

I understand. You are in favor of forcibly taking money / raising a tax which hurts consumers - a consumption tax in the multi-millions for a special interest group at the expense of ordinary citizens.

open-i

I went through our public school systems...and amazingly enough learned enough to go to college and get a good job afterwards, I'm not real sure why everyone thinks we have such a dire situation with our schools, they are going to class to learn, they do not need to be coddled in order to learn. Maybe we as a state need to lower our expectations and maybe the school system needs to cut some fat. Everyone brings up that we pay our teachers 51st.....however noone seems to like to bring up our private sector wages which i would venture to guess are close to the very bottom of the US as well....those low paying private sector jobs are taxed to pay our low paid teachers....don't ask for an increase for them till the hand that feeds them is increased....

shunkaska

Our kids rank in the top 15 yet we pay our teachers 51st, last yr in our district we had 3 applications for 1 position, 15 yrs ago we would have had 25+. We pay our state workers 44th, Duugaurd told our district he would support the 1 cent tax if we took the cut, so he lied to us and every other district, he has also made it almost impossiable to get young teachers to stay in our state. The penny tax will create much needed funds,I hope though if it passes the Gov doesn'tr do what janklow did, we voted to OK video lottery for education-he hijacked into the general fund.We need to take that money back add the share of the penney and put our kids and teachers first/not last in the eyes of most....

dodasd

Take a look at the salaries of the upper management of the schools. They contribute nothing to education but are well paid for it.

Cruiser

My concern about this is the sales pitch . . . only 1 penny to be used for education and medicaid. I remember well the sales pitch for Powerball . . . if we go along with gambling the revenue will lower our property taxes and only be used for education; it will not go into the general funds. Guess what? Never happened! No tax break and no funds for education . . . only general funds.

There is no guarantee that this revenue will actually go into education and medicaid100%

Reallyreally

Look at it this way, either pay for education now, or pay for unemployment, health care and corrections later. If we do not invest in our youth, what expectation have we set for them? We need our goverment to prioritize for the future.

Deklan
Deklan

In ’10, it was noted the state was facing a structural deficit, and cuts would have to be made.

Daugaard noted in his ’12 State of the State speech that from ’71 to today, there has been a decline of 50,000 students in K-12 schools, while there has been an increase of 869 teachers and an increase of 3,569 in other staff.

Additionally, the RCASD, using one-time money, hired 46 additional personnel in the '07 - '08 school year, while enrollment increased by only 199 students. The district noted it rolled the dice hoping to be rewarded by the legislature...

85% of the RCASD Budget is staff salaries and benefits.

The taxpayers have been “investing” in education, and property owners will pay more under SB 49, which was passed earlier this year by the legislature. It will increase everyone’s property taxes in ’13. The funds are to be applied to the general funds of the local school districts.

If the sales tax initiative is passed, the schools will receive money from SB 49 and the increase in the sales tax.

mwbrowniii4

spruce49, do realize that the majority of the people on Medicaid is people that have a disablity and of low income. I really hate it when people say things like you said, not really knowing why most of the people that are Medicaid is on it. I have a son that is on it and I am right at the cut off for him to be on it.

Bond Vigilante

Another way to clarify or think about this:

Take the total dollar amount that your family spends in a year and multiply by .01 (1%). This is roughly how much IM15 will cost you each year FOREVER. For many people this could be $500 to $1,000 or more. So, would you be willing to cut a check to the Rapid City School District or your local hospital and doctors for this amount? If not, then you know how you should vote.

Just a guy

Dear Bond,
Please get your info correct before you preach to the choir on a subject. Many things are actually not taxed with a sales tax. You talk about how this will add hundreds of dollars to the cost of a car? Cars do not get charged sales tax; they get charged an excise tax, as well as Motor homes and Mobile homes. Having construction done on your house wouldn't be sales taxed either. A house doesn't get charged a sales tax, nor does any prescription medications or other medical devices. Don't forget about health insurance premiums. I could go on but I think the point is made.
Not only is it false that this would raise taxes on every thing a family spends money on, you specifically stated items that don't get charged a sales tax.
Also you are correctly when you said it would be 20% because if you get charged five pennies for the dollar and one penny gets used for this bill, 1 divided by 5 makes 20%. The thing about percentages is that they can be some what missleading depending on how they are used.
Don't take this as a critic about your position; it is important though to use facts to make a great argument in a debate.

Bond Vigilante

Excise tax, fuel tax, etc. yes, you are right. Thanks for the clarification and my apologies to the readers for my bad information.

My larger point still stands. That being that most things people consume are subject to sales & use taxes and that the nature of IM15 is regressive and permanent. Taking 20% of all sales tax revenue to go to only two groups sure sounds different than a "penny tax"...no doubt that is why they promote it that way.

Bond Vigilante

There are multiple reasons why this measure is a bad idea:
1. Calling it a penny sales tax sounds innocuous, but what this measure really does is PERMANENTLY raise the sales tax from 4% to 5% on everything that you consume...food, clothing, diapers, gas, utilities. This would add a few hundred dollars to the price of a new car and a few thousand dollars to the price of a new home.
2. It's regressive. It hits low income folks the hardest because it raises what they must pay on all the basic necessities.
3. It's not good government. Tax issues belong with our elected Governor and Legislature, circumventing this process to pass a tax hike that would only benefit two groups is a very poor idea.
4. I could compile a long list of organizations that are vital to the community and are hurting for money, should we raise the sales tax a few more percent, maybe to 8 or 9%, so that they can get their share?
5. If you actually read the IM15 language it says that 20% of sales tax revenues each year will go into the Moving South Dakota Forward fund! TWENTY PERCENT? What?
6. The oversight on this is questionable at best. Again it removes the Legislature from the process.

At the end of the day if there is a funding problem then it is the responsibility of our elected leaders to deal with it. If they aren't doing this to your satisfaction, then vote for new leaders.

I'll be voting NO on IM15 and will be very surprised if something like this could pass in South Dakota where we have always been cautious about the insidious nature of ever higher taxes to support ever growing spending.


Deklan
Deklan

The 1¢ trick pony show continues without the mention of SB 49, which will increase everyone’s property taxes in ’13. The funds are to be applied to the general funds of the local school districts.

If the sales tax initiative is passed, the schools will receive money from SB 49 and the increase in the sales tax.

An earlier Journal article observed RCASD Superintendent Tim Mitchell as affirming, that rising insurance costs and an "unsustainable pension system" do not paint a pretty picture of the district's future.

But what he didn’t note was property owners have been levied an additional tax for the district’s pension system, and has been for many years.

It appears, from past articles, the district supports the taxpayers paying more to sustain the district’s pension plan, while many in the private sector aren’t even offered a pension plan.
At this point in time, many economic indicators show the continuing downwards slide in the economy.

It should be noted, that no matter what happens with the economy, and whether the taxpayers can afford it or not, the district’s pension plan is guaranteed to be paid by the taxpayers.

Yet, the taxpayers haven’t heard any intentions of the district making modifications to its unsustainable pension plan.

Medicaid has always caused a shift in costs to private payers… South Dakota is not unique to cuts in Medicaid. Due to economic conditions and the loss of tax revenues, many states have made cuts in their Medicaid program.

It’s been said it’s only a penny, but it’s more than one mere penny. It’s an ongoing consumption tax which will be applied to all of the necessities of life: utilities, clothing, and food.

If the initiative is passed, it will affect those with the least amount of disposable income…

Many students participate in the free lunch program and backpack program. The 1¢ consumption tax will affect their parents detrimentally on the essentials of life.

Yet, those who work in education and the healthcare fields, request more funding, while many in the private sector, due to economic factors, have been forced to reorganize their personal finances downwardly without receiving additionally funding.

Dog Soldier
Dog Soldier

Just another way for the dentists, doctors and hospitals to increase payments that ultimately support their already lucrative lifestyle. Most expensive health-care and education system in the world with most pitiful outcomes. What's the daily vibe ?? Blame the teachers and I suppose include the nurses because these people have no power or voice. However, if we pay the doctors and dentists more money , they'll do better.

spruce49

A $0.01 tax increase will not break my budget and I do believe that our educational system needs more funding but I have a hard time with 50% going to Medicaid when there are so many people that take advantage of that system.

BHPatriot

Eifeldude is correct.. And it goes a lot deeper than just the Gambling Revenues, (by the way, where is ALL that money going?). How about the Tobbaco Tax, (believe they have done that several times). And finally how about the Property Tax? Is it not enough? Will we get a cut in property taxes? I doubt that very much. Seems to be a lot of money out there, maybe we need an Audit?

eifeldude

Legalize gambling they said
All the proceeds will pay for the schools and lower taxes they said.

Can you imagine if they never legalized scratch lotto tickets and gambling where we would be with the schools. Well how did we manage before all of this.....now they want yet another tax increase to manage schools. Maybe the problem is, the people administrating the budget need a class in economics 101

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