Lawmakers debate multiple property-tax measures as mileage, sales-tax and freezes collide

Representative votes on three linked measures and an amendment dominated the House floor on March 10 as lawmakers debated different approaches to property-tax relief for homeowners.

Representative Carrie Goodwin, sponsor of an amendment to Senate Bill 169, told the House "this is the year to cut property taxes. Our proposal cuts property taxes 35% to every owner occupied homeowner." Goodwin's amendment (169D) proposed funding the relief by raising the state sales tax from the current 4.2 percent to 5 percent and setting owner-occupied general-education and special-education levies to $0 for the year specified in the amendment, a change she described in floor remarks. Supporters said the plan would produce immediate, easy-to-explain relief for homeowners; opponents said it would shift taxes onto renters, tourists and agriculture and increase state sales taxes on lower-income residents.

The House approved Representative Goodwin's amendment on a narrow floor vote (ayes 35, nays 34, excused 1), but the full bill, Senate Bill 169 as amended, later failed to secure the two-thirds majority needed where required and lost final passage (ayes 27, nays 42, excused 1).

Separately, the House considered Senate Bill 191, a different rollback-style measure that would have limited annual valuation increases on owner-occupied single-family dwellings and created related exceptions. Representative Kolbeck offered Amendment 191H to remove taxing districts such as some volunteer fire districts from parts of the bill; the attempt to amend lost and debate continued. Senate Bill 191 later failed to achieve the required two-thirds vote and was declared lost (ayes 7, nays 62, excused 1).

After a procedural reconsideration, lawmakers returned to Senate Bill 216, the governor-supported measure to limit assessed-value growth in owner-occupied property and cap certain tax-revenue increases for a multiyear period while enlarging eligibility for existing property-tax assessment-freeze programs. Representative Heinemann described the measure as a collaborative product of the executive branch, the Department of Revenue and a 10-member legislative working group. Key provisions that passed included: - a countywide, 3% limit on annual increases in owner-occupied assessments for the next five tax years (section 1); - caps on how much certain local taxing districts and school capital-outlay budgets can increase because of growth (with opt-outs available by local vote in some cases); - expanded eligibility for the property-tax assessment-freeze program (raising income thresholds and increasing the maximum eligible home value).

Heinemann said the bill "limits the increase in owner occupied assessments to 3% countywide for the next tax year, next 5 tax years" and pointed to sections that increase income limits for the assessment-freeze program and raise the maximum home value eligible for the freeze. After floor debate and amendment (2-16J), the House passed Senate Bill 216 as amended (ayes 53, nays 16, excused 1).

Discussion on the floor repeatedly returned to two themes: whether relief should come from a revenue infusion (Goodwin's sales-tax proposal) or from constraining growth and spending, and whether shifting revenue sources would impose new burdens on renters, tourists or agriculture. Representative Mortensen argued the Goodwin approach moves the burden partly to out-of-state visitors in a way he said was positive: "To the degree that there is a shift in this bill, it is a shift from South Dakotans... onto people who visit this state." Opponents warned the sales-tax increase was regressive and would hurt lower-income households and renters; Representative Hughes called sales tax a "regressive" consumption tax and warned it would fall harder on people with less ability to pay.

Where measures changed funding mechanisms or local revenue authority, lawmakers stressed the local-option safeguards: several proposals included opt-outs or grandfathering provisions so existing assessment-freeze participants would not suddenly lose protections.

What happens next: Senate Bill 216 will proceed for additional legislative steps after passage in the House; the other measures (Senate Bill 169 as amended and Senate Bill 191) failed to pass the House. Lawmakers and the governor signaled a desire to continue study and negotiation on broader reforms, with supporters calling the enacted measure a first step and opponents urging further work on spending and long-term fixes.

Votes at a glance: Senate Bill 169 (as amended) '169D amendment passed 35-34; final SB169 failed on final passage 27-42. Senate Bill 191 failed 7-62. Senate Bill 216 (as amended) passed 53-16.