Voters consumed by exactly what IM28 will mean

As voters go to the polls there are many people discussing the “grocery tax” and what its impact will be on South Dakota and Keystone and Hill City. The proposed initiated measure (IM-28), if passed, would  prohibit a state sales tax on anything sold for human consumption, except alcoholic beverages or prepared food.

IM-28 is worded in such a way as to “conflict” with South Dakota codified law, according to a press release from the South Dakota  Municipal League (SDML). The release calls the measure language “poor drafting” and implies it will be up for judicial review if it passes.

The press release states that “if IM-28 passes, cities and towns would lose at least $51.5 million in sales tax revenue each year.” That number is from a SDML fiscal analysis on each municipality in the state.

According to the SDML analysis the impact to Hill City would be $246,790 or a 19.5 percent reduction in Hill City sales tax. 

Keystone would lose about 5.2 percent, or $50,978. 

Hill City finance officer Stacia Tallon says the city itself does not have any hard data on the potential impact but notes that any impact will be on sales tax only. She also believes that due to potential pending litigation, should the proposed measure pass, the town would likely not be impacted  any time soon.

Hill City School District business manager Cassandra Ott says the district will be “minimally impacted” since it does not currently receive state aid.

Superintendent Blake Gardner is aware of the SDML opposition to the measure but notes that the Association of South Dakota School Boards, South Dakota School Administrators and other school-affiliated associations have not taken a position on the issue.

Gardner notes that “passage of IM28 would certainly hurt school funding,” which could mean the state cuts education funding or looks to another source of revenue. But Gardner stressed there are families in the district who could benefit from a grocery tax savings. 

“The tricky thing about IM 28 is that it does not define human consumption which could include more than just food,” Gardner said.

Many opponents of the measure cite items like tobacco, toothpaste, aspirin, mouthwash and even toilet paper which might be considered as being sold for human consumption.

Keystone finance officer Samantha Epler said “if it (IM28) had been written for non-prepared food it would be a whole lot different. From what I understand, from what’s going on, there’s a lot of changes if it does pass,” she said. 

She says if the current version of IM28 passes it would have a “huge impact.”

Epler said, “if it was just non-prepared food in this town I don’t think it’s $52,000. We have a tiny little store and a convenience store.”

No matter what happens the money would hit both the general fund and the debt service fund, by equal amounts, in a town that has been operating in the red for several years.

Sarah Digmann, owner of the Keystone Country Store, says that IM28 could mean a learning curve for her employees. Currently, employees at her small store enter all sales manually, so logistically she would have to educate employees as to what goods have sales tax and what don’t. 

“It would make it hard for someone manually entering in products,” Digmann says. “That’s why we don’t accept EBT either.”

Voters will get to decide on IM28 during early voting, which is currently under way, or on election day, Nov. 5.