As the Brookings Economic Development Corporation, we believe its important to voice our concerns regarding Initiated Measure 28, which proposes eliminating the state sales tax onanything sold for human consumption. While we support efforts to reduce financial burdens on South Dakota families, the current draft of IM-28 raises significant issues that could lead to unintended consequences and long-term financial instability for the state and our communities.
One of our primary concerns is the measures lack of clarity. IM-28 does not adequately define what constitutes a consumable product, and it remains unclear whether municipalities will retain any ability to tax these items. This vagueness creates uncertainty for consumers, businesses, and local governments.
More troubling is the fact that items like tobacco, CBD products, and other non-food consumables could fall into the category of untaxed goods under this measure. If passed, the Legislative Research Council estimates that IM-28 would result in a $646 million loss to the states budget a staggering figure when you consider that 80% of state expenditures go to education and health services.
For municipalities like Brookings, the consequences are just as severe. According to the South Dakota Municipal League, the City of Brookings would face a loss of approximately $1.6 million annually. This shortfall would force deep cuts to essential services such as law enforcement, road maintenance, and public amenities like parks and pools services that are vital to maintaining our communitys quality of life. Furthermore, South Dakotas Tribal governments would see a significant reduction in funds through existing sales tax compacts, threatening critical programs and services.
In short, IM-28, as currently written, risks creating a financial crisis for both the state and local governments. The loss of revenue would leave South Dakota with difficult choices either deep cuts to essential services or tax increases in other areas to make up for the shortfall.
Its important to emphasize that we fully support efforts to provide tax relief. However, the current language of IM-28 is too vague and presents significant risks to our community. South Dakota deserves a more carefully crafted plan that delivers financial relief without jeopardizing essential services and the stability of our state and local budgets.
Thats why BEDC stands with the Economic Development Professionals Association of South Dakota, the Municipal League, our state and local Chambers of Commerce, and other organizations in urging you to vote “no” on IM-28. Lets work together toward a more balanced solution that truly benefits all South Dakotans.
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