Veto of lodging tax bill doesn’t align with Noem’s freedom-loving rhetoric

Gov. Kristi Noem could often be heard during the pandemic saying that South Dakota’s response to COVID-19 was based on freedom. Her message was that the state wasn’t going to tell local governments to shut down — that was up to them. It wasn’t going to shut down some businesses while designating others as essential because it wasn’t the job of government to pick winners and losers. State government, under Noem’s leadership, was generally going to leave South Dakota’s citizens alone to deal with the pandemic in their own way.

That hands-off strategy, according to the governor, was in part responsible for the booming economy that South Dakota enjoys today. That’s a message Noem still touts. In February, she went to Washington, D.C., and spoke at the Cato Institute, a libertarian public policy research organization, about “Government and Healthcare — A Dangerous Policy Cocktail.”

(As it turns out, Noem spent a few days in Washington, D.C., speaking on various topics. She also talked to the America First Policy Institute about how states can respond to Communist China and she served as the keynote speaker at the Coolidge Foundation’s “Coolidge and the American Project” conference.)

To reiterate: During the pandemic, Noem was all for no state control of business or local governments. That was a great deal of her message at the Cato Institute.

That’s what made her recent veto of House Bill 1109 seem so odd. That bill would allow business improvement districts to raise the occupation tax on motel rooms from $2 to $4, or to 4% of the rented room charge.

Proponents of the bill pointed out that the last time the tax had been raised was in 2005. They said the money from the tax is used in marketing efforts to attract more events like sports and livestock shows and noted that the biggest users of hotel rooms in South Dakota are out-of-state tourists.

There was no tax increase in the bill. Its passage would only allow business improvement districts to pass a tax increase if they thought there was a need in their area for more money for tourism promotion. It left the decision up to local governments and local businesses. That smells a lot like freedom.

In her veto message, Noem said an increase in lodging occupation taxes would hurt the state’s rural residents who have to travel, and sometimes stay overnight, when they visit the state’s larger cities for business, medical care or youth sporting events. Her veto message to the House sounded as if the tax would go into effect with the passage of the legislation. That’s not the case, but it didn’t keep the governor from vetoing the bill in an over-the-top manner.

Noem used a branding iron with the word “VETO” on it to drive her message home. Governors veto bills all the time but rarely go in for so much showmanship. Her branding iron veto was something we’d expect to see from the governor in “Blazing Saddles,” not in the South Dakota Capitol.

Perhaps Noem was a bit peckish about dealing with a bill that could possibly raise taxes since, just more than a week before her veto, the Legislature had rejected her signature proposal to eliminate the state’s sales tax on groceries.

Because Noem got out her branding iron early, the House tried to override her veto during the main run of the legislative session. That vote failed 41-29 as veto overrides need a two-thirds majority. In the House, that means it needs 47 votes.

Noem has made her handling of the pandemic part of her resume. As evidenced by her trip to Washington, D.C., she’s willing to share that message far and wide. That’s why it’s odd for the governor to wrap her hands around her branding iron to veto the lodging tax when she claims her hands-off approach during the pandemic was the best thing for the state’s local governments, businesses and economy.