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House approves lower cap on annual property-tax revenue increases after long floor debate
Summary
Lawmakers voted to reduce the cap on annual property-tax revenue increases for local taxing districts from 3% to 2.5% (or inflation, whichever is less), a measure backers said pressures local governments to curb spending; opponents warned of service cuts and strain on counties.
The South Dakota House on Feb. 25 approved House Bill 12 35, which reduces the annual allowable increase in property-tax revenues collected by taxing districts from 3% (or inflation, whichever is less) to 2.5% (or inflation, whichever is less). The measure passed on a 39-31 roll call.
Sponsor Representative Greg Jamieson framed the bill as a way to curb spending growth at local taxing authorities that he said is driving property-tax burdens on homeowners. “This bill sends a direct message to all taxing districts … give me a break. Property taxes are haunting all of us in this session,” Jamieson told the chamber.
Opponents, including several county and municipal representatives on the floor, warned the change would force difficult trade-offs at the local level — cuts to roads, bridges, public safety and other services — because counties cover many statutorily required expenses with limited revenue flexibility. Representative Stevens, who urged colleagues to vote no, said counties receive only a portion of property-tax revenue but face a large share of unfunded obligations and that a lower cap could force cuts to infrastructure and public safety.
Details and impact: The bill leaves school district capital-outlay and special-education levies unchanged to avoid potential bond-rating problems. Local taxing districts retain the option to ‘opt out’ and raise their levies if voters approve. Sponsor Jamieson said he expected the measure would provoke local conversations about spending priorities; several members urged a summer study of the funding formula for longer-term solutions.
Vote and procedural notes: HB 12 35 passed 39-31. The sponsor and several members said they intend to pursue related studies and proposals to address education funding formulas and unfunded mandates.
Closing: The measure limits routine year-over-year local revenue growth and shifts the onus for any further increases to local voters and taxing authorities. Because the change affects many counties, school districts and municipalities, members forecast intense local debate as the new cap is implemented.
