PIERRE, S.D. — A task force made up of state lawmakers and members of Gov. Larry Rhoden’s administration have come to terms on a property tax relief package.
The governor announced the breakthrough Thursday morning during a weekly press conference, flanked by most of the state lawmakers who sat on the property tax workforce group. Rhoden said that he and the entire team of 10 lawmakers had agreed to the legislation they had drafted.
The five-section piece of legislation comes in as an amended form of Senate Bill 216, a “hoghouse” bill introduced ahead of the deadline to serve as a placeholder for an eventual property tax relief package.
The comprehensive measure would limit the increase in owner-occupied assessments to 3 percent countywide for the next five years. It would also cap the amount that local governments and school outlay budgets can grow as a result of growth — new construction — to 2 percent or actual growth from the previous year, whichever is less.
Further, renovations to existing owner-occupied homes that add 40 percent or less of value to the house will be excluded from the growth calculation.
“Local governments shouldn’t need to grow just because a homeowner makes a small improvement,” Rhoden noted on this part of the proposal.
Lastly, the measure would increase maximum income limits for the state’s assessment freeze program. They are currently set at $35,000 for single-member homes and would rise to $55,000. For multi-member homes, the cap would rise to $65,000. The maximum eligible home value for the program would go from $350,000 to $500,000.
One of the main priorities of the group was to avoid raising other taxes in order to accommodate a sales tax relief package. Several proposals that have been floated this legislative session have included raising the sales tax rate in some capacity — seasonally or permanently — in order to cut property taxes.
Rhoden clarified that though no such accommodation would be made, any move to provide property tax relief to one class of properties, in this case owner-occupied, would represent a shift to other classes in some form.
“This does not rely on any kind of increase in outside taxes,” Rhoden explained. “But it does represent a shift. What I have said before is when you tweak one class of property or another, that represents a shift. But this is a justifiable shift in my mind in this case.”
The governor said that his office would not take a stance against any other property tax proposal despite the introduction of his own legislation. Lawmakers, including many on the governor’s property tax work group, have introduced separate bills this year also aimed at property tax reform.
Members of the group touted the legislation, which will likely see its first action in committee next week.
“This was a bold move by the governor, and we look forward to continued discussions as bills progress through the House and Senate,” said Rep. Liz May. “These bills aim to address other areas that will compliment the work we’ve done with the governor.”
Fellow workgroup member Sen. Taffy Howard echoed that sentiment.
“Homeowners across the state, especially in a select few areas, have seen property taxes outpace personal income, and in some areas those increases have been exorbitant,” Howard said. “I am very glad Gov. Rhoden has made this one of his first priorities.”
May and Howard are both West River Republicans.
Property tax relief has been a hot topic over the last several legislative sessions, but no solution has made it to the governor’s desk. But with skyrocketing tax bills in the owner-occupied category, some lawmakers say a solution needs to get to the governor this year, as voters begin to eye potential solutions themselves through a potential ballot issue.
