PIERRE | Big dollars flew both directions Friday as South Dakota lawmakers went opposite ways on alcohol tax revenues for counties, cities and state government.
The Senate decided cities and counties should get less, while state government would get more for potential costs running a veterans’ cemetery sought in Minnehaha County.
The House of Representatives however decided county governments should get twice their current share and the additional money should come at state government’s expense.
The current split is 50 percent for the state, while counties and cities split the rest.
The House measure, HB 1308, would shift more than $4 million from the state general fund to counties. Counties would have to use the additional money for law enforcement.
The bill from Rep. Susan Wismer, D-Britton, originally proposed charging an additional 25 cents per drink and creating an alcoholic beverage health and safety fund the state, counties and cities would share.
The House Taxation Committee instead turned it into the measure giving counties twice their current share of the existing tax. House members voted 38-18 to approve the committee’s version late Friday afternoon.
Gov. Dennis Daugaard and state budget officials oppose it.
The divide came on the final day to pass or kill every remaining bill in the first chamber.
Starting Monday, lawmakers have 10 working days left to figure out what to do on the alcohol tax, if anything, and how to pay for another veterans’ cemetery if there is one.
Another wild card is an amendment pending on the cemetery measure in the Legislature’s Joint Committee on Appropriations from Sen. Larry Tidemann, R-Brookings.
The co-chairman proposed Feb. 15 that $9.4 million be raised in an endowment fund for the cemetery’s annual expenses for personnel and equipment.
State Bureau of Finance and Management budget analyst Mark Quasney presented a worksheet that day. One table showed total costs, based on four full-time staff, rising from an estimated $261,993 in 2019 up to $524,198 in 2038.
A second set showed revenue expectations. The third set showed deficits across the board.
Using the most optimistic assumptions, the deficits ranged from minus-$76,507 in 2019 to minus-$311,736 in 2038. Using the least optimistic assumptions, deficits started at minus-$225,335 in 2019 and climbed to minus-$472,313 in 2038.
South Dakota has the Fort Meade National Cemetery near Sturgis. More than 350 miles separate Sioux Falls and Fort Meade.
Other sites in the region are the North Dakota Veterans Cemetery south of Mandan and national cemeteries at Stillwater, Minn., and Omaha, Neb.
'Large ongoing cost'
Fort Meade has 19 full-time staff plus seasonal help. For the Sioux Falls site, the recommendation is six full-time staff. To start, the state bureau is assuming four would be needed, along with prisoners and local volunteers.
Even then, Quasney said, “We have a large ongoing cost.”
Under Tidemann’s plan, the endowment would be managed by the South Dakota Community Foundation. The state Department of Veterans Affairs could draw on the endowment’s earnings to run the cemetery.
Further, upon reaching $9.4 million in the endowment, the department could file the state’s application to the federal administration that oversees national cemeteries. The endowment amount is based on an assumption that investments could earn 4 percent and the earnings would subsidize the cemetery’s operations.
The amendment also would allow the department to apply for a $6 million grant to use for constructing and equipping the cemetery. It also calls for $600,000 to come from the state general fund for designing and planning the cemetery.
Tidemann’s amendment surprised many cemetery supporters who went to the hearing to testify, including legislators such as Rep. Larry Zikmund, R-Sioux Falls. He is lead House sponsor on the cemetery legislation, SB 91.
Sen. Jim Stalzer, R-Sioux Falls, said he received a quick look at Tidemann’s amendment just before the hearing began. Stalzer is the cemetery bill’s prime sponsor.
“Don’t let the second floor govern what you do. You make the decision,” Zikmund told the appropriators, referring to the part of the Capitol where the governor’s office is located.
Rep. David Anderson, R-Hudson, said the committee wouldn’t make a decision on the amendment for some time. He is co-chairman.
“It’s more significant than the committee can be expected to analyze and come to settlement on,” Anderson said.
Need for dialogue
The panel still hadn’t taken action as of Friday night. However, the committee on Thursday killed a second Stalzer-Zikmund bill, SB 118, that would have created a $600,000 endowment account to be funded through grants, donations and gifts.
Gov. Dennis Daugaard spoke on Feb. 15 to news reporters about the need for dialogue on the cemetery. “We all need to agree on what is the cost,” he said.
One decision, according to Daugaard, was whether the operations should be funded from state government’s general fund or an endowment fund or both. “I think the parties are working toward that information,” he said.
Since then, the governor met with several legislators and budget officials talked with legislators and several leaders of veterans’ groups, according to Tony Venhuizen, his chief of staff.
“The governor is optimistic that a plan to fund the cemetery’s ongoing operations will come together, especially given improved revenue estimates,” Venhuizen said Saturday.
Sen. Justin Cronin, R-Gettysburg, meanwhile proposed Friday that cities and counties receive less of the alcohol tax so the state can pay for staffing and operating the cemetery.
His proposal would reduce the cities and counties to 23.33 percent apiece from their current 25 percent shares. The 3.33 percent of the tax revenue that would be freed could be used to fund the cemetery “through the normal budget process,” his amendment said.
Senators adopted Cronin’s changes 28-7. Two hours later the House did the opposite and doubled the counties’ share at the expense of the state.
Rep. Taffy Howard, R-Rapid City, said counties did “100 percent” of the work that the alcohol tax funds, but they received only 25 percent of the revenue.
“Does the state deserve 50 percent of the money? No,” Howard said.
She noted that state revenue forecast for fiscal 2019 is up $18 million since the governor’s December budget speech.
“Well, I’m sorry, I think the counties deserve some of that,” Howard said.