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SD House Republican leaders support comprehensive property tax study • South Dakota Searchlight [1]

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Date: 2025-02-19

Property tax reform should start with government spending cuts and include difficult discussions about public education funding, House of Representatives leaders on the State Affairs Committee said Wednesday at the South Dakota Capitol in Pierre.

The committee rejected legislation that would shift the property tax burden from homeowners to sales taxes and endorsed a proposed legislative summer study to investigate property tax policy. Property tax revenue goes to cities, counties and schools, while the state depends on sales tax revenue and cities also receive sales tax revenue.

House Speaker Jon Hansen, R-Dell Rapids, said he opposed the tax shift bill because it didn’t address the root issue of rising taxes.

“Our first look should be how we can reduce the government, how we can provide cuts, before we start thinking about how we’re going to increase taxes to pay for a tax,” Hansen said.

Republican caucus not receptive to tax shift, leaders say

House Bill 1019 would reduce the property tax mill levy on owner-occupied homes for general education and special education from $4.167 to zero, thereby saving homeowners $416.70 for every $100,000 of a home’s assessed value. The proposal would save homeowners $280 million in total, said Rapid City Republican Rep. Tim Goodwin, prime sponsor of the legislation.

An increase in the sales tax rate from 4.2% to 5% would raise the equivalent $280 million to fund the property tax reduction. The legislation would allow “property tax reform to pay for itself,” Goodwin said.

Rep. Tim Reisch, R-Howard, said tourists would help foot the bill by shifting the burden to sales taxes.

Opponents, including organizations representing businesses in the state, the South Dakota Farm Bureau and Americans for Prosperity-South Dakota, said the legislation would shift the tax burden from one group of South Dakotans to another. The Bureau of Finance and Management also spoke against the bill, telling lawmakers the Governor’s Office prefers a more “targeted” approach.

Rep. Greg Jamison, R-Sioux Falls, one of the House majority whips, said that although the legislation offers “what the people want” in a sizable property tax cut for homeowners, the House of Representatives Republican caucus “doesn’t have an appetite” for shifting taxes.

“Generating new revenue isn’t what this body wants to do, it’d rather cut spending,” Jamison said.

The committee voted 8-3 to defeat HB 1019.

Committee endorses summer study recommendation

The House State Affairs Committee is scheduled to consider several other property tax proposals on Friday. Republican Gov. Larry Rhoden incorporated some of the ideas into his legislative proposal revealed last week, saying that other “reasonable proposals” could move through the legislative process.

Rhoden’s legislation would cap growth in owner-occupied home valuations for five years, put stricter limits on the annual growth of local governments’ property tax collections and expand eligibility for property tax relief programs.

The Senate Taxation Committee voted on Wednesday to table three other property tax bills because they were incorporated into the governor’s legislation or were “not workable,” said Senate Taxation Chairman Steve Kolbeck, R-Brandon.

Whatever the Legislature moves forward with, Hansen said, it needs to “stop the bleeding” of rising property taxes. After the Legislature passes some sort of legislation this session, the body should establish a summer study committee to analyze property tax policies and government spending, he said.

Hansen introduced the resolution to create such a study, which the committee endorsed Wednesday. The resolution does not call for studying government spending but proposes “a comprehensive review of property tax policies.”

“Over the next year, the people are demanding that we identify impactful, substantive measures to provide significant and lasting tax relief for families,” Hansen said.

Legislators conducted studies on property taxes in 2024 and 2022.

Education funding is “the elephant in the room” when discussing property taxes, Jamison said. Other lawmakers agreed, saying the summer study should review government funding and spending.

“If it doesn’t involve a spending cut then we’ll never fix the tax,” said House Assistant Majority Leader Marty Overweg, R-New Holland. “That’s the way it is.”

No opponents spoke against the proposed summer study.

The committee voted to endorse the resolution 11-1. Reisch was the sole vote against the resolution. It’ll head to the House next.

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[1] Url: https://southdakotasearchlight.com/2025/02/19/sd-house-republican-leaders-support-comprehensive-property-tax-study/

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