State legislators say homeowners won’t stand for another year of inaction on calls for relief
PIERRE — It appears tax relief is coming to South Dakota homeowners.
Legislators at the state Capitol on Tuesday advanced a trio of proposals aimed at addressing sustained calls for action from constituents burdened with increasing tax assessments in recent years.
“If we don’t get some real property tax relief for our citizens, I will help lead the charge to get something on the ballot to provide our citizens with some real relief,” Sen. Taffy Howard said on the Senate floor while urging her colleagues to support Senate Bill 191, among nearly two dozen proposals that have been considered this year by the state Legislature.
Those measures come in response to ballooning property tax valuations in high-growth areas of the state, a result of county tax assessors using recent home sales to determine how much other nearby properties should be taxed.
And with an influx of new residents since the COVID-19 pandemic in 2020, property tax bills have jumped more than 10 percent in a single year in multiple South Dakota counties.
That’s why SB 191 proposes rolling back property valuations to 2020 levels for those who purchased their homes before November 2020 while also applying a 3 percent compounding increase for each year since. Anyone who bought a home since 2020 would be assessed a tax bill based on the value of their property when they acquired it, under the bill, which also extends the 3 percent cap to those homeowners.
It also stipulates that all future valuation increases for all homes would be limited to 3 percent as well, unless the property is sold, transferred, or undergoes major renovations or additions of more than 40 percent of the property’s original value. Home improvements valued at less than 40 percent of the property’s worth would not prompt a reassessment.
Sen. Amber Hulse, who crafted the legislation, acknowledged that her bill could result in county assessors replacing any loss in tax revenues with higher tax bills on agricultural land. But the Hot Springs Republican said that can’t be helped if the Legislature wants to address property tax increases being applied to single-family dwellings.
“They got a really sweet deal, and over the years their burden has actually shifted onto owner-occupied and non-ag,” she said, referring to agricultural landowners and the way property tax assessments have been applied to that land-use designation. “(This) ensures families can budget, plan and stay in their homes without being taxed out of it.”
Her colleagues voted 35-0 in favor of SB 191.
While its support wasn’t as resounding, Gov. Larry Rhoden’s tax relief proposal, unveiled earlier this month, also earned the blessing of a majority of senators.
Receiving a 30-5 vote of approval, Senate Bill 216 would limit the increase in owner-occupied assessments to 3 percent countywide for the next five years, cap the amount taxing districts and school capital outlay budgets can increase as a result of new construction, and increase the maximum income limits for the assessment freeze program to $55,000 for single-member homes and $65,000 for multi-member homes. The bill also increases the maximum eligible home value to $500,000.
Both measures will next be considered in the state House, which also passed a measure aimed at addressing property tax values Tuesday.
That iteration of property tax relief came in the form of House Bill 1235, legislation that its author — Rep. Greg Jamison — says “sends a message to local taxing districts, and that message is give me a break.”
Right now, the amount of revenue from property taxes counties, cities, and schools collect cannot increase by more than 3 percent or the rate of inflation — whichever is less — in a single year. The Sioux Falls Republican’s proposal, however, would change that yearly increase cap to 2.5 percent or the rate of inflation.
Jamison said although the measure would still allow taxing districts to opt out, its passage would force local elected officials to think harder about what they’re spending money on.
“It’s a local issue. Those spending taxing authorities and what they spend is what directly impacts property taxes. It’s not what we do here,” he said.
While it also passed, HB 1235 faced the most opposition of any of the tax-relief legislation that earned approval in the Legislature this week.
Of the House’s 70 members, 31 voted against it.
For Rep. Mike Stevens, the financial plight of counties is a sticking point.
“Our counties have the least means available to finance the mandated obligations that they have,” the Yankton Republican said, noting that 27 percent of all property taxes paid by South Dakotans go to the counties, while the rest go to the schools and municipalities.
At the same time, nearly 80 percent of county budgets are spent on functions they are obligated by law to provide. That reality, Stevens said, leaves only infrastructure like roads and bridges as expenditures counties could consider cutting.
Jamison admitted that HB 1235 would cause pain but contended his bill still allows counties to generate additional tax revenues by opting out of the cap, a maneuver that is subject to a public vote.
“They just can’t increase their budgets over and over and over again at that 3 percent,” he said.
