SDAT director defends budget, explains cloud conversion cost growth and anti‑fraud steps while DLS flags contingent reductions
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Summary
At the subcommittee hearing, Department of Assessments and Taxation Director Dan Phillips described modernization efforts, staff retention gains after salary increases, and steps to curb tax‑credit fraud; Department of Legislative Services flagged contingent BRFAA reductions and asked for supplemental appropriation corrections.
Department of Assessments and Taxation Director Dan Phillips and senior SDAT staff described agency modernization efforts, staffing changes and budget issues to the Public Safety and Administration Subcommittee of Appropriations.
DLS analyst David presented the fiscal 2026 allowance for SDAT, which DLS said decreases by $7.6 million (4.3%) to $168.9 million. DLS told the committee the fiscal 2026 allowance includes a contingent $28.1 million reduction that depends on provisions of the Budget Reconciliation and Financing Act (BRFAA). One provision would change the historical 50/50 cost‑sharing split between SDAT and local jurisdictions for real property and business personal property valuation and IT expenses to a 90/10 split, moving $20.9 million from general funds to special funds in DLS’s presentation. DLS recommended SDAT and the Department of Budget and Management introduce a supplemental budget item to correct a contingent general fund reduction to $21,231,952 and a matching special fund appropriation.
DLS briefed the panel on SDAT program metrics: assessment accuracy (median assessment-to-sales ratio) rose to 92.5% in fiscal 2024; SDAT assessed 82% of personal property returns by the October 31 goal in fiscal 2024; and the statewide assessable base increased 6.3% in fiscal 2024 to $945.6 billion. DLS noted tax credit programs account for roughly 51% ($85.1 million) of the allowance; the homeowners tax credit accounts for $56 million of the fiscal 2026 allowance. DLS also asked SDAT to explain why homeowner and renter tax credit participation and spending have shifted in recent years.
Director Phillips said SDAT completed a headquarters move, reopened an in‑person public counter with an online appointment system, and is migrating legacy mainframe applications to a cloud revenue integrated system (CRIS). Phillips said the CRIS project has rising costs because of scope changes, including additional end‑user functionality and statutorily mandated program changes that required programming work (for example, changes to application deadlines and attestations for tax credit eligibility). DLS’s analysis shows fiscal 2026 CRIS funding in the allowance at $37.7 million and questioned the accuracy of a cited total project estimate of $36.4 million.
Phillips described other steps SDAT has taken: adding a chief information security officer, increasing salary ranges for real property assessors effective July 1 (DLS presented minimum increases between $0 and $4,331 and maximum increases between $3,256 and $11,456), and a fall in assessor vacancies after salary adjustments. SDAT reported 30 vacant positions as of December 31, 2024, with four vacant more than one year; the department said two long‑term vacancies remain but one candidate would start the following week and another role is filled in an acting capacity for training.
On tax‑credit integrity, Phillips said SDAT issued an RFP to partner with national firms to cross‑check homestead credit applicants, has begun sharing rent‑roll data with partner agencies, and is cooperating with the comptroller to verify homeownership and residency. Phillips acknowledged a prior reassessment notice mailing error, described new vendor checks and PDF spot checks of printed notices, and said he has seen no problems with the current year’s mailing.
DLS recommended committee narrative requiring two reports on assessor vacancy rates and recommended restricting some funds in the fiscal 2026 budget until SDAT submits two CRIS status reports. No formal vote was recorded in the hearing. Committee members pressed SDAT on cost increases and on whether salary increases have made the agency competitive; Phillips said salary changes reduced vacancies and improved retention.
Less critical details: DLS recommended releasing $25,000 of previously restricted FY25 funds after finding compliance with a required report; DLS asked SDAT to explain whether the fiscal 2026 homeowners tax credit allowance is adequate given recent participation trends.
The subcommittee then closed the SDAT portion of the hearing.
