While SD lawmakers consider limits on property tax growth, opting out of limits could get tougher

Yahoo

26-02-2025

Rep. Sue Peterson, R-Sioux Falls, listens to Gov. Kristi Noem during her 2023 budget address on the House floor of the South Dakota Capitol on Dec. 5, 2023. (Makenzie Huber, South Dakota Searchlight)
As South Dakota lawmakers consider tighter limits on the growth of property tax collections, several have said local taxing entities could still choose to 'opt out' of those limits.
But there's also legislation that would impose a new requirement on opt-out decisions by school boards.
The House Education Committee advanced legislation Wednesday at the Capitol in Pierre that would require school boards to hold elections on opt-outs. Boards currently have the option to pass an opt-out without sending it to a public vote, although the public can refer it to a vote.
Sen. Sue Peterson, R-Sioux Falls, said she introduced Senate Bill 208 as part of the effort to solve the state's 'property tax problem.'
School boards would be required to hold elections for opt-outs and to issue capital outlay certificates, which school boards use from their capital outlay funds to purchase equipment, improve facilities or for emergency expenditures. Currently, school boards are only required to put general obligation bond votes to an election. General obligation bonds are more expensive and focus on building new facilities.
'This brings school boards into line with what counties are required to do,' Peterson said. 'Spending limits for local political subdivisions were put into place for a reason, but the current system of optional referral of opt-outs is making spending limits obsolete.'
The bill already passed the Senate in a 19-15 vote. It heads to the House next.
Property tax tinkering continues as SD lawmakers advance ideas to rival, complement governor's plan
Nearly 42% of school boards opted out of property tax limits payable in 2024, totaling $34 million collected above the limits on property taxes, according to the Associated School Boards of South Dakota. In fiscal year 2023, the latest data available on the state Department of Education's website, 163 capital outlay certificates were in play across the state, totaling $832 million issued.
Americans for Prosperity-South Dakota supported the legislation, with Deputy State Director Jen Beving saying it could increase transparency, engagement and voter turnout. Americans for Prosperity is a conservative political organization that has supported proposed diversions of public funds to pay for nonpublic education options.
Public school education lobbyists opposed the legislation, saying it is unnecessary and would cost taxpayers more money to fund more elections.
'This is not one of the property tax bills I think that should be a priority,' said Dianna Miller, representing the Large School Group.
Several property tax bills are still on the table, such as Gov. Larry Rhoden's property tax proposal including a cap on countywide assessment increases, and an assessment rollback bill — both of which passed the Senate — and a House-endorsed bill that would lower limits on local governments' annual increases in property tax collections to 2.5% or inflation, whichever is less.
The sponsor of the House bill, Rep. Greg Jamison, R-Sioux Falls, referenced opt-outs during the floor debate on his legislation.
'All of these bodies, taxing districts, all have the authority and ability to opt themselves out to raise the revenues that they need,' he said.
Another pending bill from Sen. Amber Hulse, R-Hot Springs, would require local governments to publish an extra public notice 10 days before any hearing on an opt-out proposal.
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