Voters in South Dakota turned down a proposition that would have eliminated the state’s 4 percent gross receipts tax on cell phone service. Initiated Measure 8, was defeated by a margin of 61 to 39 percent. Opponents raised concerns that loss of the tax would cut off revenues to local governments and would result in tax increases elsewhere, even though the tax itself raised only $8.5 million last year, of which just 40 percent ($3.4 million) gets passed through to local governments, according to www.votesmart.org, a non-partisan voter information Web site. Given that South Dakota’s total state budget for 2005 was $2.35 billion, and its proposed budget for 2006 was $2.57 billion, a hike of some $220 million, you think that with a little work, someone could have found way to cut a measly $8.5 million, which represents less than 4 percent of the 2006 increase and three-tenths of 1 percent of the overall state budget.
Steven Titch served as a policy analyst at Reason Foundation from 2004 to 2013.