Debunking Two Big Lies about Initiated Measure 15

I voted for Initiated Measure 15, the extra-penny sales tax to fund K-12 education and Medicaid. I'm not deeply enamored with IM15. There are decent arguments against this regressive tax. Whether IM15 passes or not, we will have some serious legislating to do to make our state taxing and spending more just and effective.

But I can recognize bogus arguments made against Initiated Measure 15. Two of the biggest fibs about Initiated Measure 15 are the following:

1. IM15 is the biggest tax increase in state history.
2. IM15 dumps much more money into education and Medicaid than has been cut.

The first one is a matter of mathematical interpretation. The dollar figure, $180 million in new revenue, may be correct. But raw dollar figures over time and inflation are bogus. Percentages matter. Jon Walker lists changes in the sales tax in his November 4 article on IM15. We implemented a state sales tax of 2% in 1935 (in the midst of the Depression and the Dust Bowl, no less!). In 1937, we upped it to 3%. Adding that extra penny increased the net sales tax by 50%. In 1969, we added another penny, a 33% increase in the sales tax. In 1980 and 1987, we implemented brief extra-penny increases, each of which was a temporary 25% increase. IM15 proposes to increase the state sales tax from 4% to 5%, a 25% increase. That's a lot of money, but proportionately, it is not the biggest tax increase in South Dakota history.

The second claim above is also untrue, at least in terms of K-12 funding. Jon Walker provides the following numbers on our state per-student allocation for K-12 education:

I added the fourth column to show what would have happened to the state per-student allocation if we had followed the funding formula in 2011, 2012, and 2013 and increased education funding by 3%. We'd be at $5,251 per student. That would be $760 more than we are spending this year per student.

According to this year's sales tax revenue and K-12 enrollment, Initiated Measure 15 would increase state spending on K-12 education by about $720.

In other words, Initiated Measure 15 restores 95% of the funding that schools should have received if Pierre had not reneged on the K-12 funding formula for three years in row. Under IM15, compared to where they would have been under the the fiscal policies preceding 2011, our K-12 system will still be running short $40 per student, or a touch more than $5 million statewide.

IM15 is a big tax increase, but it is not the biggest in South Dakota history. And it does not put back into education more than has been cut. It actually falls just short of filling the gap our legislators have dug in the last three budgets.