This interview originally aired on "In the Moment" on SDPB Radio.
You can usually find Jonathan Ellis scoping out a story in the state Capitol or elsewhere in the state for The Dakota Scout. He brings his journalistic expertise to In the Moment as a Dakota Political Junkie.
Today, he discusses state revenue estimates, what's changed since last week in the legislature and how that affects the tax debate.
Plus, is Gov. Kristi Noem building up to a big announcement? Can we expect to see her among the presidential candidates in 2024?
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Lori Walsh:
You're listening to In The Moment on South Dakota Public Broadcasting. I'm your host, Lori Walsh. On our Wednesday shows, you can also tune in to the livestream on sd.net, on SDPB'S YouTube page, on SDPB News Facebook page. So you can see the face of Jonathan Ellis, who is seated in our Capitol Studio in Pierre. He's a veteran South Dakota reporter. He's co-founder of the independent journal, the Dakota Scout, and a reporter for them of course. He's joining us now for our Dakota Political Junkies Weekly Analysis. Ellis, welcome back. Thanks for being here.
Jonathan Ellis:
Yeah, thanks, Lori. If they're looking at the livestream, they will see an extremely tired face.
Lori Walsh:
Are you haggard today?
Jonathan Ellis:
I am. It was a late night last night and then a very early morning this morning. And as Representative Tordsen was just saying, that they're getting in the meat of it. And that's true. I mean, there's a sense of urgency that's picking up with some of the committee chairmen, chairwomen about Crossover Day coming up. So yeah, it's definitely starting to pick up.
Lori Walsh:
If folks don't know, Crossover Day, you got to get everything from one body to the next. So if it's in the Senate, it's got to go to the House. If it's in the House, it's got to get to the Senate or it is not going anywhere this session. So that sense of urgency will only build between now and next Wednesday, and then we'll be talking about that. All right. So Tuesday, and this is the joys of legislative session and probably why you're so tired, Tuesday they get the revenue updates. That's a big deal. Tell us about that.
Jonathan Ellis:
Yeah, they did. They had a budget briefing in the morning and then you do your regular session stuff. And then they came back in the afternoon and they haggle, this subcommittee of the appropriators. There's 10 of them, five from the Senate, five from the House, and they're haggling over ... They have a couple different estimates they can choose from. They have one from their own analysts at the Legislative Research Council, and then the administration has a state economist from the Bureau of Finance and Management. They have different ways of how they forecast revenue sources, and the lawmakers have to pick and choose a little bit about which revenues do they trust better and why.
There are some underlying motives going on here too. Among the House members last night as they haggled, and I think I refer to it as a game of chicken, the House members were trying to set revenues at higher levels than the Senate members were. And there are a couple reasons there. I think for example, Representative Linda Duba, she's a Democrat from Sioux Falls. She was among the House members. I think her reasoning would be, and we've talked about this before, but her reasoning would be that when revenues are set so low, she doesn't feel like programs are getting enough funding. And among some of the Republicans, they want to set the revenues higher, so it makes it easier then to actually implement tax cuts.
On the Senate side, they're a little more conservative. They're more reluctant to go with a tax cut on the Senate side. So they want to set the revenues lower. So there was a lot of that going on back and forth. Which estimate do you trust? Why? That kind of thing. And they would break. They would take five to 15 minutes amongst their groups, the Senators or the House members, and then they would come back and see if they could come to a compromise on certain revenue streams. And eventually they did. They set a budget of about $2.3 billion.
For context, there has been a ton of money coming into the state for the last couple of years, primarily, I should say, through to the state coffers primarily because of so much stimulus funding from the federal government. Part of that has been inflation that has come with that. So, a lot of money coming in. And context wise, I mean just a couple years, that's almost a quarter billion dollars more, I should say, it's more than a quarter billion dollars more than the budget that came in two years ago. So it's a lot of money.
Lori Walsh:
All right. So inflation goes up, hurts consumers, it's tough to buy groceries, but the sales tax revenues go up. So that brings us back to this food tax conversation. You talked to lawmakers who remember the days when Governor Daugaard had to do a lot of painful cutting. Some of these people have long memories. Yes?
Jonathan Ellis:
Yeah. The thing is though, there are fewer of those lawmakers here. So they don't remember those days of pain where initially it started off with Governor Rounds, and Governor Rounds was willing to use some reserves in order to backfill programs. Governor Daugaard came in with a new mentality that you don't ever use reserve funds for ongoing expenses, and instead he cut. And for the lawmakers who are left, and again, there aren't a lot of them, lawmakers who are left, they remember those days. So I think they're less inclined maybe, I don't want to speak for them, but I could imagine that some of them are maybe less inclined to go with certain property or certain tax proposals on the table. You talked about the food tax. There's also an across the board tax. And then of course, property taxes are in the mix.
Realistically, I think there's an appetite among a lot of them for a tax decrease of some kind. The food tax is the one that I think some of them, especially when you go back to the ones who have been around, they are maybe more reluctant to shrink the tax base, and the food tax is a pretty significant part of that. If you've been in South Dakota and covered the legislature at all, you soon will become familiar with the vernacular of a broad-based sales tax base, and in shrinking that, there's some reluctance there among some of them, whereas maybe they would be more inclined for an overall tax cut in the overall rate or maybe they want to look at property taxes. So, still a lot going on. And we've got basically what, after this week, we've got three weeks left, so a lot's going to get done in the next three weeks.
Lori Walsh:
So Governor Kristi Noem wants that food tax. It was a campaign promise. She still wants it. Let's talk about her for a little bit, and weave in Senate Bill 185, because that is a legislation to establish a committee on foreign investment. And how these two connect is that they're both big platforms for Governor Noem. She was on Newsmax a couple weeks ago talking about, "Protecting the entire country from our enemies being our neighbors," talking about her credentials in national security. She is at the American First Policy Institute today talking about China, purchasing of ag land, TikTok. And then tomorrow she should be at the Cato Institute talking about a speech called government and healthcare, a dangerous policy cocktail. I had to read my own writing there, a dangerous policy cocktail. So she is laying out her big, what she sees as wins, her big proposals for food policy, how the nation should see her.
At the same time she's trying to win votes in Pierre. Nikki Haley announced that she's running for president. Do you see this building to an announcement from Governor Noem, or is this just what she does all the time? She takes whatever's happening to South Dakota, she takes it to that national level. We talk about it, and it's really not about national office. That's just about her trying to get her policies passed. How do you put all that together and what do you make of all that?
Jonathan Ellis:
I get the sense that she's amped it up a little bit since winning reelection. She obviously was in the national eye quite a bit during the COVID Pandemic for her fairly unique response in how she handled it. But I do get a sense that she has been ... I mean, it's interesting to me that she's with the American First Group and then she's with Cato. Within the conservative movement, I suppose if you're going to put both of them in the "conservative movement", they don't see eye to eye on stuff. So Cato did not invite her to talk about foreign bans on land. I don't think that would be in Cato's repertoire. But going to the COVID pandemic, that's something that Cato would appreciate. But definitely those are pretty big forums within the conservative movement.
Do I think that she's announcing necessarily? I don't know. I don't know. I mean, certainly she's putting herself in the national stage where even if she's not announcing, she's putting herself in the conversation of a potential vice presidential pick. Maybe later on down the road, a cabinet secretary of some kind. So she's definitely upping her national image. And I'll say this, that if you go back and look at her fundraising numbers from during her reelection campaign, they put on all of their campaign finance reports, they reported all the small dollar donors that they didn't even have to report. I mean, you only have to report up to a certain amount. I think it's $200. I don't have that off the top of my head, but they were putting in donations of 25 bucks, things like that. They had 100,000 donors from across the country. And that tells you that she's already got a broad base out there of people who are willing to send her money.
That might translate to a presidential race. Who knows? I mean, when they polled presidential numbers, she's been polling pretty low among the field of candidates. But this early, that doesn't necessarily matter. People can catch fire. But this is getting to that time where people are going to have to start to announce their intentions. You have former President Trump, he's in it. You mentioned Nikki Haley. Mike Pompeo's moving in that direction, as are DeSantis in Florida. So it's getting to that time. And so it's not maybe the coincidence that she's upping her national profile with these appearances.
Lori Walsh:
How important is it that she gets some wins out of this legislative session? If she's all in on food tax and lawmakers don't give her that, does that affect her in national politics later down the road?
Jonathan Ellis:
It doesn't help her. But at the same time, she could say, "Look, I mean, I put the proposal out there and the legislature said no." I mean, it would help her probably if it passes. Does it harm her irreparably if it doesn't? I don't see that happening. No.
Lori Walsh:
No. She was a big part of the, oh, what was it called? The American Tax and Job Relief Act, the Donald Trump era tax cut. She was such a big part of that conversation, I'd have to think she's going to bring that up as well. Here's a really interesting article from the Dakota Scout. The headline is, Should South Dakota Governors Choose Their Lieutenant Governor? You're looking at Senate Bill 40 here and the state conventions, which were quirky last election cycle, and whether or not legislation will go forward changing that process. Tell us what interests you in this, because I think the article was fascinating.
Jonathan Ellis:
Well, it would totally change the way in which these constitutional officers are picked, and that actually will be on the Senate floor this afternoon. So we'll see if it advances to the House. But how it works now, I mean, the only constitutional officer that's picked by voters in a primary is the governor. And traditionally the governor has said, "Hey, I want so-and-so to be my lieutenant governor," and that person was always picked at the convention. Well, we've seen in recent years more of a split within the Republican Party. We saw Steve Haugaard, who challenged the governor in the primary, then try to challenge Lieutenant Governor Larry Rhoden at the convention.
So this proposal would just say, "Hey, we're putting all of these constitutional officers on the primary ballot. They're not going to be picked at convention." And there are some pretty interesting, I think, arguments on both sides. For one thing, South Dakota is a little unique in that we have all of these officers picked at convention. I think most states are, especially for Attorney General and Lieutenant Governor, are picked either the Lieutenant Governor as a running mate or attorney general, by voters, a popular vote in the primaries.
But there are interesting arguments. The conservative activists, who want to keep it as it is, make a good point that it's hard for a Secretary of State candidate to raise a bunch of money to have statewide name recognition, and that it's better to be vetted through the Republican rank and file at the convention. But then on the other hand, you have the people who are arguing that these should be primary votes that you open up to far more voters than you do if it's just held through delegates at the convention. So, I think very good arguments on both sides.
Lori Walsh:
All right. That's Senate Bill 40. If you're listening to our seven o'clock rebroadcast, go on our website, sdpb.org/news for the update or check out the Dakota Scout. There'll probably be an update there as well. Jonathan Ellis is a reporter for the Scout. Thank you so much for being here with us. We appreciate your time.
Jonathan Ellis:
Thanks for having me, Lori.
