This interview originally aired on "In the Moment" on SDPB Radio.
Governor Larry Rhoden recently released a property tax proposal. Journalist Patrick Lalley argues residents of Sioux Falls could get more benefits if politicians shifted focus.
Lalley is the editor of Sioux Falls Live and joins us to dive into the politics of property taxes.
Read his full commentary.
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The following transcript was auto-generated and edited for clarity.
Lori Walsh:
You're writing more about property taxes, specifically about the nuances of property taxes in Sioux Falls.
So we talked about property taxes last week on the Dakota Political Junkies. You're going to provide a slightly different perspective.
Why is this sticking with you as something that needs to be ferreted out?
Patrick Lalley:
Well, what first got my attention, and I listened to that segment and it was very informative, there were some things in there that I'm not sure about. It was old, it was history from the Janklow years and everything else.
But when I hear the legislators and the governor say that we have to do something about property taxes, and this time it's because of Sioux Falls and the Black Hills. It just got me curious because I live in Southeast Sioux Falls, and that's always one of the places where they say taxes are going up. That's one of the growth areas.
And it's true, the valuation of my house has gone up. Since 2017, as I said in the column, they've gone up, my valuation has gone up $100,000, my tax has gone up about $1,000 per year. And I look at that from 2017 and I think, "That's a long time ago, yeah, my taxes are more and I don't want to pay them, but am I revolting over that?" And the answer is no. That's not something that I'm going to go and talk to my legislator about.
I think there are other things, right? So I started looking at just sampling because, I will say this, it is very difficult to pull together data on property taxes.
Lori Walsh:
In Sioux Falls, yeah.
Patrick Lalley:
In Sioux Falls. And anyway, it's very complicated because you immediately have three entities that are not the state, which are the county, the city, and the school district. And of those, the school district takes the biggest chunk, because they've got no other way to fund, right?
Lori Walsh:
And just for people who don't live in Sioux Falls, just because you live in Sioux Falls doesn't mean you're in the Sioux Falls School District. It doesn't mean you're in Minnehaha County.
Patrick Lalley:
Yep. And I write about that in the column and I think it is very instructive because people don't know necessarily where they live.
Lori Walsh:
That's your tweet of the day. People don't know necessarily where they live. Come on.
Patrick Lalley:
Well it's shocking, people move to Sioux Falls and don't realize they moved into Lincoln County and they got to drive to Canton to get their license plates or whatever. But you can live in Lincoln County, Harrisburg School District, and the city of Sioux Falls.
Lori Walsh:
Yeah.
Patrick Lalley:
You can live in the city of Sioux Falls, the Brandon School District in Minnehaha County. I mean there's all these different combinations. Tea Area you can live in. Sioux Falls, Tea Area, and Lincoln County. And all of those different entities have a different demand on your property taxes. And it's all based on the mill levy, which gets very confusing. But all that means is every $1 per $1,000, that's the mill levy.
But what happens is if you have a school district like Harrisburg, for instance, which is growing like crazy, or Tea area, which is growing like crazy, even Lennox, these suburban school districts where they're just expanding, expanding, their total property goes up, the value of their property. Sure, but if you're Harrisburg, you've had to build multiple schools in a short period of time, the demands on the property taxes are going to be much higher.
And as I write in the column, what do you expect them to do? They're building a future education system. The demand on your property taxes is right now, but you're paying for something for 30, 40 years. And that can be hard. That's a pressure on your taxes. But if that's the problem, if that's where the pressure is coming from, that's not a tax revolt.
Lori Walsh:
Right.
Patrick Lalley:
That's something different. And I guess my real issue here is when the state gets involved, and why I wrote the column, is that they are imposing from Pierre something that may not work for everybody in Sioux Falls.
And so you've got a problem, but what you're doing is coming in and just blanket trying to change something that I think is going to cause more problems than it's ever going to solve. It's going to cause a problem for more people and the future of the community, the future of our education systems, not just Sioux Falls, but Harrisburg, all those different places. And we have these huge challenges in Sioux Falls and this is what the legislature is concerned about.
They're not solving anything for Sioux Falls with what they did, certainly what they did now, which is so tiny and piecemeal. But the governor has said he's coming back with more plans. I don't know where this pressure is really coming from. And if this is the solution, I don't see it solving the problem that may exist.
Lori Walsh:
Okay. What don't you like about the plans? One of the questions we have is where's the pressure really coming from?
Patrick Lalley:
Yeah.
Lori Walsh:
We're going to talk more about that in a minute from an educational standpoint.
But the governor's proposed half penny sales tax, counties can opt in or opt out. Why don't you like that for the city of Sioux Falls, where most of your coverage is?
Patrick Lalley:
Well first of all, we're over two counties. The city of Sioux Falls is in two counties and an increasing proportion of our population is in Lincoln County. So that's one thing. You pay it in Lincoln County, you don't pay it in Minnehaha County. Or you pay it at the grocery store.
There's a Get-n-Go at 57th and Cliff that's on the north side of 57th Street. If you go there, you pay a half penny more than if you go across the street to the Hy-Vee, that doesn't make any sense.
Lori Walsh:
If one county opts and the other doesn't, yeah.
Patrick Lalley:
Or the other way around.
Lori Walsh:
Yeah.
Patrick Lalley:
But also I think, to the larger point, is that over 30% of the households in the city of Sioux Falls, that's in the city limits, are not owner-occupied. Which means they will get no benefit from any property tax break.
Lori Walsh:
They're rental, yeah.
Patrick Lalley:
They're rentals. And what the governor is saying is, "I'll give you counties this half a penny of sales tax, but you have to apply that directly to reducing the property tax bill."
Lori Walsh:
Right.
Patrick Lalley:
So in Sioux Falls, roughly it was estimated at $950 a year that my property tax would go down, which is great. But if that happens, I'm also paying a half cent more in sales tax in a four-person, two-cat household that is deeply involved in the taxable economy, if you know what I'm saying.
And so probably we won't pay $957 more in sales tax, but we'll pay something. And so what am I really getting? That's an illusion. That's a shell game. That's all that is.
Lori Walsh:
And it doesn't help the renters.
Patrick Lalley:
It doesn't help the renters.
Lori Walsh:
So, Lieutenant Governor Venhuizen, when I asked him that, he said, "Well, it might help a renter get into a house, because I've just made the house more affordable for you." You say what?
Patrick Lalley:
Oh, man, I would think that would be so far on the margins as to be inconsequential. Because that's not going to appreciably change if somebody's purchasing power in terms of buying a house in the community of Sioux Falls. And the other part of that is, I won't say all of them, there's clearly a lot of renters who are below the poverty level. So what you're doing is imposing another half cent sales tax on the people who can afford it the least.
To pay somebody who, according to my theory, which is, you know, pretty theoretical right now, is people who are upset are people in upper middle-class households, which are feeling the pressure, I'm not saying they aren't, but they do have a better ability to pay that than somebody who's living in a rental house in the Whittier neighborhood, let's say.
I've been writing a lot about the property owned by Sanford. They own 200 or so properties around their campus clustered together, that's all rental. So all of those people, none of those people are going to get a break. And the hospital system isn't going to get a break because they're not owner occupied.
Lori Walsh:
Their taxes go up, yeah, but the governor's office would say, "Well you have a choice. We're not coming in and telling you to do it.
Patrick Lalley:
No.
Lori Walsh:
"Don't do it. And then if you have a problem, talk to your county officials."
The state is just offering you tools for your toolkit, Patrick.
Patrick Lalley:
Yep. And I think you're giving with one hand and taking with the other. And I don't think it's going to do anything appreciable. And it's not solving the problem.
Lori Walsh:
What's the problem?
Patrick Lalley:
The problem is that school districts have demands that they have to meet.
Lori Walsh:
So you're defining a different problem than what they're defining?
Patrick Lalley:
Yep.
Lori Walsh:
Their problem as they're defining it is that they are getting phone calls from constituents who say, "I cannot afford my property tax bill."
Patrick Lalley:
Yep.
Lori Walsh:
The problem you're defining is that schools are underfunded.
Patrick Lalley:
Well, partly, and if you have a problem with your property tax bill, go to the people who are charging you the property tax.
Lori Walsh:
Yeah, let's talk about that. Because let's take a pause for this educational component.
Patrick Lalley:
Yeah.
Lori Walsh:
Because you and I have talked about this extensively.
Patrick Lalley:
Yeah.
Lori Walsh:
And the theory is a lot of people don't understand their own property tax bill until it becomes a problem for them.
Patrick Lalley:
Right.
Lori Walsh:
You can call your director of equalization.
Patrick Lalley:
Which you did.
Lori Walsh:
Which I did this morning, and they walked me through everything and I learned more in 10 minutes on the phone with them about my personal property tax bill than I've ever known in the 25 years of owning my home. So there are people there who are going to help you understand this.
Patrick Lalley:
Yes. And that's all online too, by the way.
Lori Walsh:
Yeah.
Patrick Lalley:
If you are savvy, you can dig into it.
Lori Walsh:
I went with the, pretend I'm not savvy and I only have 15 minutes because you were coming in. I thought I need to know what it's like to make a phone call.
Patrick Lalley:
Right.
Lori Walsh:
And so I did. So you get these assessments in the beginning of the year. You can call and speak to and ask to speak to really the assessor, the person who came and walked outside your house, and they will explain to you why they made the assessment judgment that they made.
Patrick Lalley:
Yes.
Lori Walsh:
Now, I'm not saying that they have time for coffee with every single person, I'm not saying that. However, if you have questions and if you have problems, and they can also walk you through and help you understand the state programs that already exist.
Patrick Lalley:
Yes.
Lori Walsh:
So we've been talking a lot about senior citizens.
Patrick Lalley:
Right.
Lori Walsh:
And if you are a city senior citizen and say you've paid off your house and now you're looking at a tax bill that you can't afford, there are programs to help you if you qualify.
Patrick Lalley:
Yeah, absolutely. There's property tax caps, freezes for senior citizens. And that's legit.
Lori Walsh:
Yeah. Some veterans qualify for a freeze in their property taxes. Owner occupied is a 20% reduction in property taxes, which I didn't know.
Patrick Lalley:
Mm-hmm.
Lori Walsh:
So just because you are owner occupied, you're getting a reduction in your taxes. And you would have had to fill out paperwork to get that. So, it's written on your assessment. If you look at that piece of paper, it will tell you whether or not you have that. But you can also call.
Patrick Lalley:
Yes.
Lori Walsh:
And you can say, "Am I taking advantage of all the programs that already exist?"
Patrick Lalley:
Right. And that's just the state stuff. There are other city programs. The city has a lot of different, not just property tax stuff, but helping you fix up your home. And there's a lot of money out there for people who can't afford these things to maintain the housing stock. And people just don't take advantage of it for a lot of reasons. But if you're going to be mad about your property taxes, which you can be, you're allowed to be, find out why.
Lori Walsh:
Yeah.
Patrick Lalley:
And that's what you did. And what did you learn about your house?
Lori Walsh:
Yeah. I learned my property taxes went up $500 since 2017. Which doesn't seem to me to be, in my personal life, something I'm losing sleep over.
Patrick Lalley:
No.
Lori Walsh:
It seems reasonable to me because my house has also gone up in value by quite a bit.
Patrick Lalley:
Yep. And I think people do freak out when they see the valuations, right?
Lori Walsh:
I think that's key.
Patrick Lalley:
Yeah.
Lori Walsh:
When you get that piece of paper and you know, "I bought this house for $75,000 and now someone's telling me it's worth more than 200," there is something in you that goes, "What?" We should be like, "Yay. Look at our investment."
Patrick Lalley:
You've built wealth.
Lori Walsh:
I've built wealth, but I'm not going to move because I could not afford to move anywhere else.
But if I died and we sold the house, I would pass that inheritance on to my child. So it's part of your investment package if you're a homeowner.
Patrick Lalley:
And when you retire, right?
Lori Walsh:
Right.
Patrick Lalley:
This is how America has built generational wealth for generations. And we all know people who have taken that generational wealth from their family farmland and cashed that in, and gone on to other things in their life because they weren't going to be farmers, right?
Lori Walsh:
Right.
Patrick Lalley:
That is generational wealth, and it's real. Now, so are taxes.
Lori Walsh:
And you have to pay your fair share of taxes.
Patrick Lalley:
You have to.
Lori Walsh:
But we're South Dakotans, we don't pay too many taxes. We like to have a very, very low tax burden.
Patrick Lalley:
Right. And it comes at a time when we have just endured inflationary pressure in the broader economy. So we're all paying more for things anyway.
Lori Walsh:
And spoiler alert.
Patrick Lalley:
More is coming. I mean, that's just the reality. I don't want to argue. And it is everything. And it existed before the tariff discussion. We all know that. And the price of eggs are going up, not because of tariffs, but because of bird flu.
Lori Walsh:
So we feel a lot of pressure, which goes back to this question is where is the pressure coming from, really? And one has to wonder if all of us feeling the pressure. I mean, if you have kids right now, my daughter's flown and grown, so the pressures on me are much less, but when you have those pressures, you might call your legislator.
Patrick Lalley:
You might.
Lori Walsh:
And you might say, "My property tax bill's gone up again. Do something about it."
Patrick Lalley:
And I just don't think the state, when we have tried to do this in the past, it has not worked. I know when Jean Hunhoff was here on your show last week, she was talking about Janklow.
Lori Walsh:
Amazing history lesson. Go back and listen to the Junkies podcast if you want to hear the full history lesson. She knows.
Patrick Lalley:
Yep. And we went through what back then was a huge tax revolt and that's when we got the tax caps, property tax freezes. And there was a lot of pain that went with that. And now it still exists. The county has opted out a couple of times. The school district has opted out for different things.
Because people are like, "Well, we need a jail, right? And the state's not going to pay for our jail, so how are we going to pay for a jail?" And it turns out we built a great jail because it's expandable and we haven't needed to use the whole thing. So the decisions that were made back then to opt out on that have paid off, right? Or the school district had to build a new high school and some new elementary schools, and we don't have the growth pressure that the suburbs do, but it's still there. And so if you have a problem with your taxes, go to the people who are charging you the taxes, which is your school district, your county, and your city.
Lori Walsh:
Are we calling them suburbs now?
Patrick Lalley:
I am. I call them suburbs.
Lori Walsh:
Send your emails to Patrick Lalley at Sioux Falls Live.
Patrick Lalley:
When they're all overlapping like this, we have seven school districts in the city of Sioux Falls.
Lori Walsh:
Right. And that was one of the questions I was going to ask you at the beginning. This is a statewide radio station. Why does the rest of the state care about a 15-minute conversation about property taxes in Sioux Falls?
Patrick Lalley:
They don't maybe. I think they should. Because if this is driving public policy, then they should.
And the reason I wrote the column to begin with was that the legislature is not doing things for Sioux Falls that they should do. The best example of that is the airport. And this is why everybody should care. The Sioux Falls Airport Authority has never taken money from the city or the state until last year they took $2 million. They built a $67 million parking ramp, no public money, paid for out of their money. No borrowing. They borrowed a tiny bit.
Lori Walsh:
Not for nothing, that's a nice parking ramp.
Patrick Lalley:
It is a beautiful parking ramp.
Lori Walsh:
I don't know the nuances of how much it costs, but I'll tell you what that is a well navigable, safe and a lovely parking ramp at the Sioux Falls Airport.
Patrick Lalley:
It's great. It's really nice.
Lori Walsh:
I didn't think that sentence would come out of my mouth. God, you guys built a good ramp.
Patrick Lalley:
Well, and the Airport Authority is an amazing entity that has paid for their own way forever. They haven't borrowed money, they haven't taken public money, they've just done it. Well, now we need some serious growth. We need to go from five or seven gates to 12 gates, I think is what it is, and expand the concourse for the future so that we have flights out of here.
Because if we don't, because the demand is going up and up and up and up because there's more people here, the prices for your flight is going to go up if there aren't more options. And you can't have more options without more gates. So the Airport Authority was asking for a little bit of money, like maybe five, 10 million, just throw us a bone here, on a $108 million expansion. And it was, "No, go pound sand." Now the city's probably going to do it.
Lori Walsh:
And so the argument you're making in this column is if the state of South Dakota wants to help Sioux Falls, it should be in the areas like that of economic development and maybe not in some of these areas, in your opinion, it's not really helping?
Patrick Lalley:
Right. And that was the mayor's point way back, and he has recently been, not to me, but he's been more vocal about this after this last session. Even the Sioux Falls legislators apparently voted against this money for their airport, which I can't imagine a better economic development investment than the Sioux Falls Regional Airport.
I mean, 65% of the flights out of South Dakota come through Sioux Falls, and it's almost all of East River, which makes sense, that's where the people are. Meanwhile, the federal government is still propping up Pierre and Watertown with Essential Air, that'll go away pretty soon, and so there won't be any flights out of Pierre and Watertown. I can't imagine that when we're cutting everything else, we're not going to cut Essential Air funding to small towns in America.
Lori Walsh:
To be determined, stay tuned.
Patrick Lalley:
That's speculative on the highest level.
Lori Walsh:
That's speculative, yeah.
Patrick Lalley:
But just to the point is that we need this airport and we need it to be bigger. Every business that comes in, we're not going to get more jobs and bigger businesses coming in here if you can't fly in and out at a reasonable cost. Just think about your winter vacation to Florida or wherever.
If we don't expand the airport, all of that's going up as much as it's going to go up already, and you won't have the options and the flights will be full and everything else. We're trying to get direct flights to Washington DC or New York City or Houston. Can't do it without an expansion. Maybe, but not like we can if we have the expansion of the airport.
So all those things together, you pull it all together and I get very upset about the legislature because they're not doing the things for Sioux Falls that they should and they're doing things that I don't think really matter. And take all the social stuff out of it, just economics. I just got a press release the other day from the state, this is an infrastructure funding, $104 million in infrastructure funding for probably worthy water projects and all.
I mean, how much do we spend on Freedom Works here? For what? How about you invest that in one of the greatest economic development tools we have, which is a robust option for air travel.
