Senate agrees with House that tax study is needed
That's why they're spending the closing days of the 2025 legislative session considering possible ways to provide short-term relief, while at the same time getting ready to take a deeper look for a lasting solution.
State senators on Thursday voted 34-0 to conduct a comprehensive review of South Dakota's property tax policies. The House of Representatives had adopted the resolution 64-6 last month.
It calls for the Legislature's Executive Board to appoint a group of 16 legislators, who along with two members of Gov. Larry Rhoden's administration, will attempt to 'identify impactful, substantive measures to provide significant and lasting tax relief for the homeowners of this state.'
The measure's prime sponsor, House Speaker Jon Hansen, and its lead Senate sponsor, Republican Chris Karr, serve as the Executive Board's chair and vice chair.
Karr's remarks Thursday acknowledged there are shorter-term steps still being considered. The study would look beyond them. 'There's more work to be completed,' he said.
Democratic Sen. Jamie Smith, a co-sponsor of the resolution, said that the sales tax should be studied, too. He compared the property-tax problem to an arcade game that can't be won. 'We play Whack-a-mole with it all the time,' Smith said.
Republican Sen. John Carley urged the study panel to study agriculture property and commercial property in addition to owner-occupied. Carley also said the panel should consider ways to reduce spending.
The Legislature meanwhile is scheduled look at three property-tax measures on Monday, the final day for legislation to clear its second chamber.
The Senate will consider House Bill 1235, sponsored by Republican Rep. Greg Jamison. It proposes to allow local taxing districts including public school boards to raise the property-tax funded parts of their budgets by no more than 2.5% a year. State law currently says 3%.
The House will consider Senate Bill 216, the product of work by the Rhoden administration and a 10-legislator working group. It would limit all counties' assessments on owner-occupied homes to increase by no more than 3% a year for taxes payable in 2027 through 2031.
SB 216 would also place a 2% annual limit on additional tax revenue generated from improvements or other changes — and only if those increased the property's value by more than 40%.
The third leg of SB 216 calls for increasing the income thresholds for people age 65 and older to qualify for assessment freezes on owner-occupied homes. A single person could have household income up to $55,000 and a multi-person household up to $65,000; those upper thresholds currently are $35,000 and $45,000.
Rhoden, responding to a question from KELOLAND News, said at his weekly news conference on Thursday that he had been approached about folding Jamison's 2.5% growth limit into the proposal from the governor and legislators group. He said the offer came too late in the process. But, he noted, the two measures would be compatible if both win approval.
The House also will consider Senate Bill 191. Its prime sponsor is Republican Sen. Amber Hulse, while Republican Rep. Jack Kolbeck is lead House sponsor. It calls for rolling owner-occupied assessments back to 2021 levels for people who have lived in their homes at least that long, while owner-occupied properties purchased after 2021 would be assessed at the fair-market value at the time of purchase.
The Hulse-Kolbeck bill came out of the Senate on a 35-0 vote, but it barely survived the House State Affairs Committee hearing Wednesday night 7-6. Wendy Semmler, director for the property tax division in the state Department of Revenue, said the rollback would wipe out $16 billion of assessed value.
SB 191 was amended in the House committee at its sponsors' request, so that only owner-occupied property would be responsible for generating enough tax revenue to offset that $16 billion difference. Semmler said that tax levies to make up the difference would have to be higher and would hit harder those homeowners who bought their properties after 2021.
All of South Dakota's agricultural groups testified against SB 191 on Wednesday, as did business groups, county commissioners, municipalities, towns and townships, several county directors of equalization and a representative of a business that assists local governments with debt service and helped state government gain its current AAA bond rating.
Hulse said people who have been in their homes for some time would benefit while newer owners would pay more. Hansen asked for clarity: So the intent is not to decrease the revenue? 'That is the intent,' Hulse said.
Despite the parade of opponents, Republican Rep. Spencer Gosch called for SB 191 to go down to the House floor. 'You got four days,' Gosch told her. 'You'll have the weekend to work with some of the opponents and maybe pull a rabbit out of the hat.'
Republican Rep. Marty Overweg, an agricultural businessman and farmer, said he couldn't vote for the governor-legislators plan or Hulse-Kolbeck plan. He doesn't trust that providing owner-occupied relief won't put a heavier tax burden on agricultural property.
'I think it's dangerous. I really do think it's dangerous. You want corporate farming in South Dakota, just let taxes go crazy on the property,' Overweg said.
The House committee's chair, Republican Rep. Scott Odenbach, on the other hand voted to send both of them out. scared that ag will bear the burden. 'I hope one of these measures, the best measure for relief, can make it out of the House,' he said.
Rhoden on Thursday pointed out another hurdle that the Hulse-Kolbeck plan would need to clear.
The Legislature sets statewide tax levies for K-12 school districts as part of providing state aid to the districts. School districts as a whole are the largest recipients of property taxes in South Dakota.
Rhoden said school levies have gone down almost every year because property values as a whole have risen. Having to raise the school levies would require a two-thirds majority vote, and Rhoden sounded doubtful that the Legislature would want to do that right now.
He's raised the question with some lawmakers. 'I've asked them what do you think the chances of getting two-thirds of the legislators in both chambers to pass a bill, a two-thirds majority vote bill that increases property tax statewide on all classes of property. That would give the indication of where I stand on Senate Bill 191,' Rhoden said.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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