South Dakota legislative session marked by tax cuts, election reform, culture war headway

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South Dakota lawmakers are taking a break in the legislative session until they return later in March to consider any bills Republican Gov. Kristi Noem vetoed.

Republican legislative leaders were focused on cutting taxes when the session began in January. They now can declare victory on that topic.

The record was more mixed on other topics, ranging from restricting gender-affirming care for transgender people to limiting foreign ownership of farmland.

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Here is a rundown on how the session's top issuesfared:

Biggest Tax Break in State History

As legislators opened the session with a $423 million surplus, lawmakers were intent on passing a sales tax cut — and they accomplished that goal earlier this month. The Legislature approved a general sales tax cut from 4.5% to 4.2% that is set to end after four years. The change is expected to reduce taxes by $104 million per year.

The legislation included removal of a mechanism known as the "Partridge Amendment," which gradually reduced the state’s sales tax as more money was collected from internet sales.

Rather than the general sales tax reduction, Noem had campaigned for reelection on a promise to repeal sales taxes on groceries. Since legislators took a different approach, it wasn't clear whether she would sign the legislation.

"I still believe that the best budget option for our state’s future is the one that I presented in December, including the elimination of the sales tax on groceries," Noem said Friday in a statement. "And in the coming weeks, I will have to decide whether the budget that has been presented to me is worthy of my signature."

Stoking Fears Against China

Many lawmakers voiced fears about foreign businesses in the state but struggled to agree on strategies for restricting them.

While Noem favored creating a chapter of the Committee on Foreign Investment in the United States to judge whether a foreign entity was eligible to purchase 160 acres or more of land, some lawmakers preferred streamlined procedures to simply count foreign ownership.

"China’s kind of coming in the front door. Nobody’s putting any restrictions on anything and when you really start paying attention and looking at what’s happening, you get even more concerned," said Republican Sen. Erin Tobin, whose bill for an oversight committee was defeated.

Lawmakers and the cattle industry opposed Noem's proposal, pointing out flaws in the mechanics and cautioning against pitting business opportunities against national security.

The legislature approved a bill to require agricultural businesses to document whether their land is owned by a foreign entity for government records, as well as a bill that will cut ties between the government and overseas businesses.

A break in South Dakota's legislative session is marked by a year where significant tax cuts and headway on culture war issues reigned supreme. (AP Photo/Amancai Biraben)

Culture War Issues

Noem signed into law a bill that prohibits gender-affirming care for transgender people younger than 18.

The new law bans the prescription of puberty blockers, cross-sex hormones and gender-affirming surgery for minors. By approving the legislation, lawmakers pushed back against opponents who argued that such treatment can help young people psychologically and reduce the risk of suicide among minors.

The new measure would see medical licenses removed from health care providers who provide banned treatment to transgender youth, despite criticism from the state’s leading health organizations. It's unclear whether this will result in a lawsuit, as has been the case with similar laws across the country.

This is the latest move opposed by transgender advocates that Noem has signed. Last year, the governor imposed a ban on transgender girls and college-age women playing in state school leagues.

"Every year, South Dakota lawmakers zero in on transgender youth," said Samantha Chapman with the ACLU of South Dakota. "And every year the transgender community is hurt while meaningful problems go unaddressed."

Separately, some Republican lawmakers backed restrictions on drag shows on state university campuses and other publicly funded spaces and sought to stop children from attending such events. That effort ultimately failed.

A bill to ban library books "harmful to minors" also lost in an initial hearing.

Tribal Sovereignty

In South Dakota, native youth are put into foster care at three times the rate of white youth, and some lawmakers proposed a bill aimed at placing Native American children with other relatives when they are removed from their families.

The move came as the U.S. Supreme Court considers challenges to the federal Indian Child Welfare Act, which gives preference to Native American families in foster care and adoption proceedings for Native American children.

"What can the tribes do better and what can the states do better?" Democratic Rep. Peri Pourier said when presenting a statewide Indian Child Welfare Act bill. "What it really boils down to is a relationship built on trust."

Other states have added similar protections to state law, but such efforts failed in South Dakota, and proposals again didn't pass this session. Supporters expressed disappointment that Noem and Democratic legislators couldn't work together on such a bill.

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Property Rights vs. Pipelines

Ranchers called for restrictions on the use of eminent domain to install carbon capture pipelines, but lawmakers opted not to approve limitations out of concern it could hurt the state's ethanol industry and break business agreements.

The lack of action means carbon sequestration companies like Summit Carbon Solutions and Navigator CO2 can continue using eminent domain to build pipelines across the state as part of a larger regional network.

Those opposed to the limits expressed concern that restrictions could lead to legal action against the state and argued the pipelines would help South Dakota's long-term agricultural industry.

Election Rules

While South Dakota said the state's electoral system is safe and accurate, lawmakers still approved changes to election laws.

"South Dakota has an excellent election system but we can always be better," said Republican Rep. Tony Venhuizen.

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The new measures include slight changes in recounts and runoffs through language and proceedings, such as a law that enables candidates outside the primary election to run. Candidates tied for second place would be required to participate in the runoff election alongside the first-place candidates if the margin is less than 35%.