Senate approves bill requiring school-district opt-outs and capital certificates be referred to voters

Pierre, S.D. — The South Dakota Senate on Feb. 18 approved Senate Bill 208, a measure that requires school boards to refer proposed opt-outs from property-tax limits and certain capital outlay certificates to a public vote.

Supporters said the bill restores direct voter consent for decisions that can raise local property tax collections. “The taxpayers of South Dakota should have a voice in whether or not they want their property tax bill to go up,” said Senator Petersen, the bill sponsor.

Opponents warned the change would add election costs and reduce flexibility for school districts that must set budgets months before enrollment counts are finalized. “You wouldn't necessarily know how many teachers you actually needed till all the students showed up,” said Senator Wheeler, describing times when his local board passed temporary opt-outs to cover uncertain staffing needs and later repealed levies when extra revenue was not required.

The Senate adopted amendment 208D before final passage; the amendment corrected a drafting error by restoring the statutory percentage referenced in the bill from 60% to 50%, which the sponsor said aligned the bill with current statute.

Debate highlighted two strands of concern. Supporters argued the measure shifts the burden of proof to the governmental entity seeking to exceed statutory limits and offers taxpayers a clear opportunity to approve additional levies. “This will ensure that every citizen that's paying for this will know what's happening,” Senator Howard said. Opponents, including several senators with school-board experience, argued the requirement will force costly off-cycle elections and interfere with routine fiscal management. Senator Sauter said forcing votes every time could impose significant expense on districts that regularly use modest opt-outs or certificates without controversy.

Senate Bill 208 passed on a roll call of 19 yeas to 15 nays, with one senator excused. Sponsor Petersen closed by citing state totals for recent opt-outs and capital outlay certificates, saying from 2019 to 2023 districts opted out for roughly $165 million and issued certificates exceeding local capital outlay funds by roughly $413 million.

Because the bill alters the process by which local taxing decisions are implemented, proponents and critics alike said they expect the practical effects to become clearer only after districts and voters experience the new process.

The Senate president declared the bill passed; the title was deemed correct.