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SD lawmakers to pass state budget as end of session nears

March 10, 2019

PIERRE, S.D. (AP) — South Dakota lawmakers this week are set to pass a state budget, debate bills to legalize industrial hemp and address the Legislature’s commitment to scale back a 2016 sales tax hike.

The Legislature returns Monday for the final days of the 2019 legislative session. Here’s some of what’s on the agenda:

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BUDGET

Lawmakers will reshape the current state budget and approve the next one before closing out the main portion of the session on Wednesday. Senate Majority Leader Kris Langer said last week that lawmakers are “getting really close” on crafting the spending plan.

Gov. Kristi Noem in January proposed about $54 million in new ongoing spending, including 2.5 percent increases for education, Medicaid providers and state workers. She called for a nearly $1.7 billion general fund budget for the 2020 budget year that starts July 1.

She also proposed one-time spending including $3.8 million for Medicaid providers, $5 million for nursing home grants and $5 million for expanding rural broadband.

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INDUSTRIAL HEMP

Representatives on Monday are expected to send a bill that would legalize industrial hemp to Noem, who has asked lawmakers to hold off this year. The House has to debate changes made in the Senate that include broader background check requirements, giving more rulemaking authority to state agencies and restricting who could transport industrial hemp.

The 2018 federal farm bill legalized cultivation of industrial hemp nationally. Supporters contend planting hemp wouldn’t even happen until 2020 under the bill, which defines industrial hemp as containing no more than 0.3 percent THC.

Noem has said the state isn’t ready.

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SALES TAXES

The House is set to debate whether to accept the Senate’s changes to a bill that legislators are discussing after the state won the ability to collect sales taxes from out-of-state internet retailers. Republican Rep. Chris Karr, the bill’s sponsor, said he will seek a conference committee to negotiate differences between the chambers.

The state won a U.S. Supreme Court case last year clearing the way for online sales tax collections, which started Nov. 1. Under existing law, the state’s 4.5 percent sales tax rate is to be rolled back by one-tenth of a percent for every additional $20 million in online sales tax revenue collected, with a floor of 4 percent. But officials have said new legislation would be required for the envisioned tax reductions to occur.

The bill in its current form would repeal provisions directing the tax cuts and instead allow the Legislature’s budget-writing committee to propose reductions each year that online sales tax revenue grows by $20 million. The more forceful version the House approved would automatically trigger a one-tenth of a percent rate reduction each budget year that sales tax collection growth exceeds cost-of-living plus $20 million, also setting the floor at 4 percent.

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