DLS flags SDAT budget shifts, CRIS IT cost growth; agency director outlines staffing and modernization steps

The Department of Legislative Services told the Public Safety and Administration Subcommittee that the Department of Assessments and Taxation’s fiscal 2026 allowance decreases by about $7.6 million to $168.9 million and includes contingent reductions tied to proposed provisions in the Budget Reconciliation and Financing Act that would change a 50/50 state–local cost share to 90/10 for certain real property, business personal property and IT expenses.

DLS analyst David said the BRFAA provision would shift roughly $20.9 million in general funds to special funds under the department’s accounting, but DLS recalculated the contingent reduction as $21.2 million and recommended SDAT and the Department of Budget and Management introduce a supplemental budget item to correct the amounts.

DLS also highlighted major program funding in the allowance: tax credit programs account for 51 percent of the agency’s spending in the allowance ($85.1 million), with the homeowners tax credit at $56.0 million and enterprise zone tax credits at $20.8 million after contingent adjustments. DLS noted personal property assessment timeliness and assessable-base measurement concerns and recommended committee narrative and reporting related to assessor vacancies and the Cloud Revenue Integrated System, known as CRIS.

Dan Phillips, director of the Department of Assessments and Taxation, told the subcommittee the department has completed a headquarters move, reopened a public counter, and launched an online appointment system. Phillips introduced his senior leadership team and said the CRIS project will redevelop mainframe applications onto a cloud platform; the fiscal 2026 allowance includes $37.7 million in CRIS funding, and DLS asked the agency to explain why estimated costs have continued to rise.

Phillips said some of the CRIS scope growth resulted from legislatively mandated changes — including modifications to tax credit application deadlines and how certain applicants may attest to income — and from added end-user functionality. He told the committee the department changed its vendor contract to results-oriented payments so vendors are paid when deliverables meet standards. “The initial project did not meet our expectations and the speed of calculations and ease of use, and we’ve had to request changes to that,” Phillips said.

On staffing, DLS reported 30 total vacant SDAT positions as of Dec. 31, 2024, with four vacancies open more than one year. DLS highlighted a notable drop in assessor vacancies after July 1 salary increases tied to fiscal 2025, and recommended continued monitoring; Phillips said the salary adjustments have helped retention and that most remaining vacancies now reflect retirements rather than departures for other employers.

Members asked about homeowners and renters tax credit spending: DLS showed homeowners tax credit use rose to $60.0 million in fiscal 2024, and the fiscal 2026 allowance of $56.0 million is lower than fiscal 2024 actuals. Phillips said some prior-year payments reflected legacy county submissions and that future projections will reflect anticipated payments for each fiscal year. DLS also noted software and staffing issues contributed to a spike in renters tax credit payments in fiscal 2024.

The department described steps taken after a reassessment-notice mailing error, including simplified notices, additional vendor audits and PDF copies of printed notices for spot checks; Phillips said the department has not observed problems with the current year’s mailing.

DLS recommended releasing $25,000 in withheld general funds after the department submitted required reports and recommended restricting some administrative funds until SDAT submits further CRIS status updates. The subcommittee did not take a recorded vote during the hearing.