Gov. Larry Rhoden wants to give county governments the option to implement a half-penny sales tax to go toward property tax relief.
The proposal is something he’s asking a legislative task force aimed at reducing property taxes to consider. That legislative committee will meet in the coming months.
“We delivered a great first step to address property taxes with SB 216, and we are not done,” said Rhoden Monday. “The people of South Dakota are looking for us to go a step further. They deserve a real property tax cut, and my proposal will deliver that for them.”
The governor’s proposal lets each county commission replace county government revenue generated from property taxes by increasing the sales tax. Those dollars must go toward reducing owner-occupied property taxes.
Rhoden said the optional tax would cover the owner-occupied tax burden for many counties in the state.
“I was looking at the spreadsheet. I think, considerably more than half the counties — that half cent would represent more than 100 percent of their property tax on the county mill levy.”
If owner-occupied taxes in the county are offset, the proposal requires those dollars go toward reducing agriculture and commercial property taxes. The optional tax would have to get renewed every five years.
According to the state Department of Revenue, about 27 percent of property taxes go toward funding county governments. A recent report finds that 80 percent of costs incurred by county governments are state mandated.
Dan Klimisch is a Yankton County commissioner and president of South Dakota Association of County Commissioners. He applauds the governor’s proposal.
“It gives options to the counties and citizens," Klimisch said. "I think it’s a good idea and look forward to working with the governor and legislature on helping to implement something like that.”
Despite having a draft, Gov. Rhoden said the idea was not ready for lawmakers to consider earlier this year. Barring a special legislative session, the proposal will not get heard until lawmakers meet in January next year.
