24-02-2025
Voter-approved flat tax resolution fails
SIOUX FALLS, S.D. (KELO) — There are many bills about property tax relief during this South Dakota legislative session but this resolution died. Republican Sen. John Carley's Senate Joint Resolution 506 to allow voters to decide on a constitutional amendment to create a flat tax rate for property taxes died in a 41st day motion in the Senate Taxation Committee on Monday.
Property owners need relief before SJR506 would take effect, said committee member Republican Sen. Casey Crabtree. Crabtree moved to send the resolution to the 41st day.
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SJR506 would create a voter-approved flat tax for all classes of property tax. It would return taxes to the 2020 level and then, install a 1% increase for South Dakota residents to 2% increase for out-of-staters in following years, Carley said in explanation.
Committee member Republican Sen. Amber Hulse said a constitutional amended flat tax may meet federal fair tax laws under the federal constitution. 'I don't know if it will meet that constitutional muster,' Hulse said.
Carley said it would save property owners an estimated $250 million to $400 million a year. That lost tax revenue could be made up by cuts in government, increase in the sales tax rate and, because of property tax stability, people would spend more money to create more sales tax revenue, Carley said.
'I think it's easy to come up with ideas politically,' Michael Houdyshell, the Secretary of the Department of Revenue, but it's much harder to enact any needed increases in state sales taxes or use unclaimed property money as Carley suggested.
Carley's resolution does not provide a set way to make up lost revenue, Houdyshell said. Without that, there would need to be significant cuts to local governments, he said.
Property taxes are a major source of revenue for school districts and county and township governments.
Crabtree said the state has had years of conservative lawmakers and he doubts there is room to cut education, roadways or safety, as examples.
The testimony of SJR506 supporters including an 82-year-old woman who said she took a job to pay her property taxes, moved committee member Republican Sen. Greg Blanc to offer the substitute motion for a do pass.
Although she knew which direction SJR506 was going, 'I like that flat tax,' committee member Republican Sen. Tamara Grove said. The do pass failed before the 41st day vote was approved.
Some lawmakers and opponents also said SJR506 would wrongly create policy in the constitution.
Supporters cited the need for property tax reform and how a flat tax was a fair system and created certainty in tax increases for property owners.
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