For the legislative period ending February 13, 2015

The South Dakota Legislature opened its 39-day session for business on January 13. One month later, action on issues important to small business has been taken and continues to progress. 

• House Bill 1069 would limit the authority of delegates to a limited Article V convention to vote for unauthorized amendments which are contrary to the legislative instructions and would provide a civil fine of up to $5,000 for any violation thereof. This bill is a sister bill to HRJ 1004.  It is an effort to alleviate the concerns some have expressed of a run-away convention. Sponsors: Rep. Jim Stalzer and Sen. Ernie Otten.Status: Passed House of Representatives 38-31 on January 28, 2015; Passed Senate State Affairs 8-0 on February 6, 2015; Placed on Senate Calendar February 12, 2015. 

• House Bill 1105 would allow an independent contractor to sign an affidavit for exempt status for purposes of workers’ compensation, and the affidavit creates a rebuttable presumption that the contractor is not an employee. The bill was amended in committee to provide that no employer or general contractor is required to accept an affidavit of exempt status as a substitute for a certificate of workers’ compensation coverage. Sponsors: Rep. Spencer Hawley and Sen. Corey Brown. Status: House Commerce and Energy Due Pass as Amended 10-1 on February 6, 2015; House of Representatives Deferred to another day, on February 11, 2015. 

• House Joint Resolution 1001 is  an effort to petition Congress to call a convention to propose amendments to the Constitution of the United States to require a balanced federal budget. The Resolution, sponsored by Representative Jim Stalzer, is a nationwide effort to use the Article V process outlined in the U.S. Constitution to move Congress toward adopting a Balanced Budget Amendment. The process requires thirty-four state legislatures to adopt similar resolutions that would call for a convention to propose a Balanced Budget Amendment. Twenty-four states have already passed the Resolution. Status: Passed House of Representatives 39-30 on January 28, 2015; Passed Senate State Affairs 5-3 on February 6, 2015; Senate Do Pass, Failed 17-15 on February 10, 2015; Senate Reconsidered, Passed 19-14 on February 11, 2015; Placed on calendar February 11, 2015.  

• Senate Bill 177 would establish a youth minimum wage for employees under the age of 18 years old at $7.50 an hour. Sponsors: Sen. David Novstrup and Rep. Justin Cronin. Status: Scheduled for hearing on February 17.  

• Senate Joint Resolution 1, a companion to HJR 1004 above, would make a formal application to Congress to call an Article V convention of the states for the sole purpose of proposing a federal balanced budget amendment. Sponsors: Sen. Ernie Otten and Rep. Jim Stalzer. Status: State Affairs Tabled, Passed, (8-0) S.J. 244 on January 30.  

• Senate Bill 135 would allow municipalities a local option for an additional penny of municipal sales tax for a limited time for a specified infrastructure project if such increase is approved by the voters. Sponsors: Sen. Corey Brown and Rep. Scott Munsterman. Status: Senate Do Pass Amended, Passed, 19-14 on February 9, 2015. Referred to House Taxation H.J. 362 on February 10. 

• Senate Bill 147 would expand Medicaid to include individuals with income up to 133 percent of the federal poverty level plus five percent for the applicable family size. Sponsors: Sen. Bernie Hunhoff and Rep. Spencer Hawley. Status: Referred to Senate Appropriations on January 28.  

• Senate Bill 156 would provide that an employee who is continuously employed by the employer for 90 days or more with a minimum of one hour of paid sick leave for every 30 hours an employee works. The employee may use the paid sick leave for herself or himself, the employee’s spouse or the employee’s child for 1.) Illness, injury, or health condition; 2.) Medical diagnosis, care, or treatment for mental or physical illness, injury, or health condition; or 3.) Preventative medical care.  The employer may require the employee to provide up to seven days of their intent to use the leave if the reason for taking the leave is foreseeable. The employer may also require the employee to provide documentation to verify the reason for taking sick leave if the leave is for three or more consecutive days. Sponsors: Sen. Buhl O’Donnell and Rep. Kevin Killer. Status: Commerce and Energy Deferred to the 41st legislative day, Passed, (7-0) on February 5. 

• House Bill 1019 revises the provisions regarding exemptions from sales and use tax of certain equipment used exclusively for agricultural purposes.Status: Signed by Gov. Dennis Daugaard on February 9.  

• House Bill 1094 would amend SDCL 60-11-3.2, which was approved by the voters during the November 4, 2014 election.  This statute currently provides that the minimum wage shall be adjusted each year for inflation based on the Consumer Price Index.  This bill would eliminate from this section language providing that “in no case shall the minimum wage be decreased.” Status: House of Representatives Do Pass Amended, Failed, (14-53) on February 10.  

• House Bill 1103 was brought forward by the South Dakota Trial Lawyers Association to change the comparative negligence standard in South Dakota. The bill would amend SDCL §20-9-2 to revise the current contributory negligence statute and make it a comparative negligence statute. The jury would be able to reduce the damages by the percentage of plaintiff’s contributory negligence by special interrogatory.  This is the same bill that was introduced in 2010 by the Trial Lawyers. Status: Passed House of Representatives 54-13 on February 9, 2015; Referred to Senate Commerce and Energy on February 10, 2015.

• House Bill 1131 is the governor’s highway funding proposal. His proposal would generate only half the amount being sought under Senate Bill 1. The proposal would generate approximately $50 million dollars and would include the following components: 1. Vehicle Excise Tax: The proposal would raise the excise tax from 3 percent to 4 percent; 2. Motor Fuel Tax: The proposal would raise the motor fuel tax by 2 cents this year with an additional 2 cents in 2016 and then automatic $.02 increases each year thereafter; 3. Vehicle Registration – The proposal would increase the fees by 10 percent; 4. Non-commercial truck registration – The proposal would increase the registration fees for heavy non-commercial (mostly farm) trucks over 27 tons to 70 percent of the commercial fees for the first year and then 80 percent the second year and thereafter. Status: There was a hearing held on February 18, 2015 before the House Transportation Committee. There were a number of amendments approved during the hearing including a sunset on the gas tax of June 30, 2030. The committee did not take final action on the bill but referred it to House State Affairs for further action. It is scheduled for a hearing on February 18, 2015.

• House Bill 1175 would prohibit the Legislature from enacting any legislation affecting an initiated measure for one year after the vote on the measure, or the date of enactment, whichever is later. Status: Deferred to the 41st Legislative Day (10-2) in House State Affairs Committee on February 9.

• House Bill 1193 is the perennial attempt to lower the sales tax on food and offset the loss in tax revenue by increasing the sales tax on alcohol and other “non-essential” purchases. Status: Taxation Deferred to the 41st legislative day, Passed, (11-4) on February 5.  

• House Bill 1227 would allow any county to impose a non-ad valorem tax in the area of the county outside the corporate limits of any municipality, by ordinance enacted by the board of county commissioners. Status: Referred to House Taxation on February 4. 

• Senate Bill 1 is the result of the Interim Highway Needs and Financing Legislative committee that approved a comprehensive bill that is projected to generate about $100 million in new revenue in its first year through fuel and vehicle taxes and fees. This proposal would institute a 3 percent wholesale tax on gas (7.5 center per gallon minimum).  Then, starting in 2016 it adds a 2.5 percent increase in the per-gallon tax rate each year until 2025. The other components of the measure include the following: 1. Vehicle Excise Tax: The proposal is to raise the excise tax from 3 percent to 4 percent.  This is estimated to generate approximately $25.3 million additional dollars per year; 2. Ethanol Fuel Tax – This is currently 8 cents per gallon.  It raises $3 million/year. The proposal is to increase the tax rate on ethanol by 2 cents per year for six years.  It is estimated to raise $750,000 the first year; 3. Vehicle License Fees – The proposal is to increase vehicle registration fees by 10 percent.It is estimated to raise $8.7 million; 4. Non-commercial truck registration – Currently farm trucks pay 60 percent of the commercial rate. The proposal is to increase the registration fees for heavy non-commercial (mostly farm) trucks over 27 tons to match the commercial registration rates.  This is estimated to raise up to $9 million, depending on how many farmers take advantage of the seasonal licensing option. 5. Dyed Diesel tax – Currently, dyed diesel is tax-exempt. The proposal is to institute at 7 cent per gallon dyed diesel tax to go into a special local bridge fund. It is estimated to raise $9.1 million. Status: A hearing was held on February 6, 2015 before the Senate State Affairs Committee.  A number of amendments were placed on the bill including an amendment that would have the gas tax sunset in 2023 instead of 2030. The bill was passed 9-0. The full Senate then approved the bill by a vote of 21-13 on February 11, 2015. It has now been referred to House State Affairs.

• Senate Bill 4 would appropriate $151,000 to SDSU Department of Economics to conduct research on the assessment and taxation of agricultural land based on actual use. Status: Deferred by chairman on February 12.   

• Senate Bill 5 would remove nonagricultural acreage property from the different classifications of real property for purposes of assessments and taxation. Status: Passed Senate (35-0) on January 26. Referred to House Taxation on January 27. 

• Senate Bill 44 would revise the present criteria for classifying property as agricultural land and provide certain additional requirements for small agricultural acreages and timber to be classified as agricultural. Status: Taxation Deferred to the 41st legislative day, Passed, (7-0) on January 28. 

• Senate Bill 62 would increase certain license fees for food service, lodging and campground establishments. Status: Commerce and Energy Deferred to the 41st legislative day, Passed, (4-2) on January 29.  

• Senate Bill 79 would exclude trailers from the wheel tax. Status: Deferred to the 41st Legislative Day (5-2) in Senate Transportation Committee on January 28.

• Senate Bill 123 would prohibit an employer from requiring an employee or applicant to provide passwords to personal accounts. Status: Judiciary Deferred to the 41st legislative day, Passed, (4-2) on February 10.  

• Senate Bill 148 would raise the gas tax from .22 cents per gallon to .28 cents per gallon. Status: Referred to Senate State Affairs on January 29. 

• Senate Bill 150 would require that an owner of an electric vehicle pay a registration of $80 in addition to the license fees already paid. It would also require an owner of a hybrid vehicle to pay a registration fee of $40. Status: Referred to Senate State Affairs on January 29.  

• Senate Bill 193 would establish a procedure for the Government Operations and Audit Committee to evaluate economic development incentives every four years. The evaluation provides for public hearing. Status: Referred to Senate Appropriations on February 6.

[Photo above: NFIB/South Dakota State Director Lindsey Riter-Rapp testifies in support of Senate Bill 177]