When it comes to property taxes in South Dakota, pick your metaphor — a house of cards, or a water bed, or…
“A carnival with whack-a-mole," said State Sen. Carl Perry, R-Aberdeen. “You put this one down, this one comes up. What we’re trying to do is make it so it balances correctly. And, that’s really not an easy thing to do, otherwise it would have already been done.”
From the governor’s office to party caucuses in each chamber — everyone under the copper dome in Pierre wants to tackle the rise in owner-occupied property taxes.
Republican Gov. Larry Rhoden told lawmakers last week it’s an issue he’s worked on in the past and he’s ready to again.
“There is a lot of concern about property taxes. That’s an issue I’ve worked on ever since I came to Pierre," Rhoden said. "I will convene leadership in the House, the Senate, and other interested parties to sit down with me and find solutions.”
That working group has already started.
Some say the problem is two-fold. Scott Odenbach, R-Spearfish, is the House Majority Leader and says legislators must find ways to show the public they’re being heard.
“Number one would be stop the bleeding and see what we can come up with this year and give taxpayers some hope that this is a serious issue,” Odenbach said.
He said lawmakers must find a long-term solution. That, he said, is intricately tied in with spending and the school funding formula.
“That’s the major cost driver. You can’t get around it," Odenbach added. "What can we do to address the spending to give the people paying the taxes some relief?”
State lawmakers set the mill levy every year.
Others, like Senate Majority Leader Jim Mehlhaff, R-Pierre, said property tax relief should be narrowly focused on areas that have seen property values skyrocket.
“That’s where the hurt is,” Mehlhaff said. “I think if any solution we come up with needs to be more focused where the hurt is, rather than a blanket, like some of the proposals we’ve seen now.”
So far, there are about a dozen bills that seek to change owner-occupied property taxes in some way.
According to the federal reserve, housing prices in South Dakota skyrocketed from 2021 to the middle of 2022. Two large increases in the total assessed value of owner-occupied dwellings followed.
Because owner-occupied property taxes are such a large topic, some also want an interim study to look at property tax reductions.
Democratic Sen. Jamie Smith said it’s something their caucus has pushed for years, which is a study on the state’s entire tax structure and its fairness.
“Rather than just say, I think this is going to work, let’s fix this one little thing… or this helps this person—it’s a shell game and we know that," Smith said. "We know we move it around and somebody’s going to end up paying more. That’s because we still have the need.”
Some state lawmakers are backing an idea to study the state’s property tax structure this year. Randy Deibert is a state Senator from Lawrence County, which includes Spearfish and Deadwood — where property values have increased significantly. He’s also a member of the governor’s working group and says lawmakers need to work toward what he calls a "bridge."
“We need to do something for immediate relief for a number of years while we go through and dissect the formulas and find a longer-term solution,” Deibert said. “But we need to act now.”
The urgency to get something done is underscored by the threat of a potential ballot question in 2026 that would pull property taxes back to values set in November 2020 and only allow them increase by no more than 2.25 percent.
Aberdeen Sen. Carl Perry said addressing the issue will require a tax shift. He said House and Senate leadership are visiting with the executive branch about what’s needed.
“We’re not at the point where I would say we’re singing ‘kumbaya,’ but I’m at the point where I would say we’re in the same hymnal and we’re on the same song and moving in the right direction," Perry said. "I think the public and constituent will be happy with the results of the leadership team.”
Perry said it’s imperative that lawmakers get the property tax issue right.
Lawmakers have until March 14 to do so.
