Apparently Gov. Mike Rounds thinks he is the king of the realm called South Dakota and just thinks he can impose tax by whim. 

The South Dakota Democratic Party and State Senate Minority Leader Scott Heidepriem tell King Mike he has no clothes on this issue. 

CAMPAIGN 2008 UPDATE - From South Dakota Democratic Party

Rounds violates separation of power with double tax

At the bottom of this email is the press release issued Monday by Sen. Scott Heidepriem at his press conference with Sen. Sandy Jerstad regarding Gov. Mike Rounds’ decision to impose an illegal tax on ethanol. 

Briefly, Rounds issued a revenue department memo to ethanol dealers telling them they would pay a new tax if they sell gas through blender pumps.  There are only 17 stations in South Dakota using blender pumps, and more that are installing them at this time.  What blender pumps do is offer consumers an easy way to create higher blends of cheaper ethanol with their gasoline beyond the commonly available E-10.  A consumer presses a button on the pump, and the hose puts E-20 in the tank.  Or you can select E-30, because it automatic combines E-85 with E-10 to give you the correct mixture.

Here’s the problem.  Station owners pay the tax on E-10 and E-85 when they receive shipments.  What Rounds seeks to do with his memo is tax your ethanol one more time because it is being mixed.  That is, simply, a double tax.

Here’s the next problem.  Rounds can not constitutionally and legally impose a new tax that was not created by the S.D. Legislature.  In fact, Rounds tried twice during the 2008 Legislature with Senate Bill 110 to increase the state tax on ethanol, and both times it was defeated in the Senate Taxation
Committee.

Since using the front door didn’t work, Rounds decided to pull a trick on consumers, ethanol dealers and the State Constitution by imposing an additional tax on blends of E-10 and E-85 — fuel products which are ALREADY TAXED.

Here’s what we’re hearing around the state:

- Ethanol dealers are upset and angry with this.  Some have indicated they will ignore the revenue department directive.  If Rounds gets pushy, they may take Rounds to court — and would probably win easily.  One dealer said he was installing blender pumps, but Rounds’ new double tax makes him uneasy about the big investment.

- Consumers are upset.  They are scared of $4 a gallon gas, and now Mike Rounds wants to increase fuel taxes.

- Tourism leaders are concerned about higher state fuel taxes immediately before the tourism season begins.  Rounds’ new double tax sends the wrong message about South Dakota tax policy, especially as gas prices soar up to $4 per gallon.

- Farmers and bio-fuels proponents are angry.  Blender pumps used commercially to blend bio-fuels first appeared in South Dakota at the Four Seasons Cooperative in Britton and then the Sioux Valley Cooperative CENEX on the east side of Watertown.  They believe blender pumps will dramatically
increase the use of South Dakota-grown ethanol because they are easy to use.

Rounds’ new double-tax is viewed as an attack on blender pump use, which could catch on across the nation as prices per gallon rise to $4 per gallon.

- Legal experts say Rounds’ directive is just a memo — not a legal tax.  Since Rounds lacks legal authority to impose a tax without it first passing the legislature, the directive is non-binding.  What’s worse is Rounds failed to get this tax passed a few months ago in the Senate, which demonstrates that he knows he is acting without legislative authority.

Remember studying American government in school when the teacher said the legislature appropriates and the executive branch implements?  Rounds must have missed class that day because he apparently believes he has the power to create new taxes.  Even Republican legislator Hal Wick knows better, as quoted in today’s Argus Leader saying Rounds’ action may be unconstitutional.

Richard A. Hauffe
Executive Director
South Dakota Democratic Party

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