SOUTH DAKOTA(South Dakota News Watch)- A citizen-led campaign to eliminate South Dakota’s state grocery tax through a measure on the 2024 ballot won’t have the backing of Gov. Kristi Noem’s administration despite earlier indications she would support it.

The sticking point is concern expressed by Attorney General Marty Jackley in his official ballot explanation.

As stated, the measure would prohibit collecting sales tax on “anything sold for human consumption.” That might include tobacco, which could impact revenue the state receives from a master settlement agreement reached in 1998 between 46 states and major cigarette manufacturers as part of litigation for health-care costs and deceptive trade practices.

Jackley said South Dakota receives about $20 million annually from the settlement. His ballot explanation also notes that the measure’s wording could impact revenue received from the streamlined sales tax agreement, a cooperative effort of states, local governments and the business community to standardize the collection of sales and use tax.

Jim Terwilliger, the governor’s budget director, told News Watch that these concerns distinguish the citizen-led effort from Noem’s much-publicized campaign pledge to repeal the state’s 4.5% grocery tax.

State lawmakers rebuffed that proposal and instead passed a temporary reduction in the overall state sales taxfrom 4.5% to 4.2%, handing Noem a significant political setback.

“Repealing the sales tax on groceries was the governor’s biggest priority this past session — and something the people of South Dakota clearly want,” Terwilliger, who runs the Bureau of Finance and Management, wrote in an emailed statement.

“As drafted, the ballot measure would bring us out of compliance with streamlined sales tax and prevent the state from taxing tobacco or medical marijuana. The language from the governor’s proposal during session did not have these issues and is the better direction for the state.

”The petition effort by Dakotans for Health, a grassroots organization collecting signatures for both an initiated measure and constitutional amendment to eradicate the food tax, loomed large in state budget negotiations and Noem’s political calculus.

The group’s founder, former Democratic U.S. Senate candidate Rick Weiland, told News Watch that he would welcome Noem’s support and even mused about the Republican governor signing the group’s petition.