Partial South Dakota results show big deficit for grocery sales tax repeal

Rick Weiland, Dakotans for Health chairman, speaks to the media during an election night watch party on Nov. 5, 2024, in Sioux Falls. Dakotans for Health sponsored a grocery tax repeal measure. (Makenzie Huber/South Dakota Searchlight)

A proposal to remove South Dakota's state sales taxes on groceries was losing in unofficial election results.

The tally was 71% against Initiated Measure 28 and 29% in favor at 3 a.m. Central time Wednesday, with 76% of statewide precincts fully reported.

The measure would apply to anything sold for human consumption. Supporters, who want tax relief for people with low incomes, said the measure's wording limits its impact to state sales taxes on groceries. Opponents alleged the measure is poorly worded and could impact a broader range of goods and services.

Those competing views led the Legislative Research Council to estimate that state revenue losses could range from $134 million to $646 million annually, depending on which interpretation of the measure's language prevailed.

Opponents of the measure also alleged it could imperil $51 million worth of annual city sales taxes on human consumption items, citing a state law that says cities can only tax what the state taxes. Supporters said that law would be overridden by language in the measure allowing cities to continue taxing groceries.

At a polling place Tuesday, Nick Mammenga, a 22-year-old Sioux Falls Democrat, said removing the sales tax from human consumption goods seemed like the right choice. He described the tax as regressive.

"I don't want taxes to keep going up for food and low-income families having to spend more," he said.

Some voters who opposed the measure feared removing one tax would lead to higher taxes in other categories.

"The state still has to get its income somehow," said Parker Stewart, 38, a Sioux Falls Republican. "I don't want to see property taxes go up or an income tax."

Donna Mitchell, 63, is an independent from Sioux Falls. She worried her property taxes would rise in compensation for lower sales taxes.

"I voted a hard no on that one," she said. "For sure."

Jeremiah Swenson, a 45-year-old Sioux Falls independent, said he voted against IM 28 because the loss of revenue could create problems for the state.

"I see the value," he said, "but I think the loss would outweigh the benefit."