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First Bills Hit the SD Legislature Hopper! Biggest Issues: Ag Valuation and More County Taxes

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All I want for Christmas is good legislation… and new wrapping! Sans chapeau, this is the new logo approved by the Legislature’s Executive Board at their November 16 meeting!

Just what I wanted in my Christmas stocking—the first bills of the 2016 Legislative Session! HB, SB, whee whee whee!

Now listed on the website that I will visit more than KELO-TV and Netflix over the next three months are eight House bills and five Senate bills. There are pretty distractions, like House Bill 1003 quintupling the fine county commissioners can slap on contemptuous meeting-goers (to $25!), and lump of coal in the form of HB 1008, Rep. Fred Deutsch’s potty break (that’s a post unto itself).

But the big timber so far appear to be the taxation bills. The interim committee on agricultural land taxes has filed three bills. HB 1007 would immediately appropriate $175,000 to have SDSU economists “conduct[] research concerning the value and methods used to determine agricultural land production capacity” “update the data used in the soil tables.” There can’t be any harm in studying the issue and updating our data, right, legislators?

Senate Bill 3 amends the three criteria for designating land as agricultural for tax purposes. Instead of producing a third of the owning family’s gross income, land would qualify as agricultural by producing gross income in three of the last five years equal to or greater than a tenth of the land’s ag valuation (not counting buildings!) and producing at least $2,500 in gross income each year. SB 3 also allows non-contiguous “management units” of at least eighty acres of unplatted land to be assessed as agricultural, as long as no parcel smaller than twenty acres is more than twenty air miles from the nearest other parcel.

Senate Bill 4 is the grassland protection bill that made the news earlier this month. SB 4 would assess at a lower non-cropland rate any unplowed native prairie or any restored grassland that has not been cropped for at least thirty years. Any landowner who lies about her grassland status will be taxed on that land at the full cropland rate plus a two-mill (two dollars per thousand dollars of assessed value) penalty.

Likely to be more controversial is House Bill 1006, in which the interim committee on county government asks not to raise your taxes but to give counties permission to raise your taxes. Specifically, HB 1006 offers 13 lucky sections to authorize counties to impose sales and use taxes. The counties couldn’t add more than a penny to your local sales tax (remember, the state gets four cents, and municipalities can impose up to two cents, plus an extra penny for bed and booze). The county government committee also offers Senate Bill 2, which would give counties one third of the revenues from the alcoholic beverage fund. Those funds would be distributed to counties based on population, not on consumption. To get the cities on board, SB 2 also increases the municipalities’ share from one quarter to one third. The argument for HB 1006 and SB 2 will be that counties don’t get enough revenue from wheel and property taxes to pay for roads and jails. But counties have been black sheep in Legislative esteem, so their chances of getting more authority and cash from Pierre may be less than 50–50.

Enjoy those substantial taxation bills with your eggbake and cookies!

14 Comments

  1. Paul Seamans 2015-12-25 09:27

    Taxing ag land at its potential sale value in areas where housing developments may spring up may force long time ranchers/farmers to develop that land for housing. I have talked to a landowner along Elk Creek east of Piedmont who intends to keep his land as a working ranch in an area surrounded by homes. Raising his property taxes too high might force him to sell some of his land for housing.

  2. Jenny 2015-12-25 09:44

    I’d like to take a moment and wish a Merry Christmas or Happy Holidays to everyone! Hope everyone is enjoying the day and spending it with their loved ones. Take a break today, Cory, you deserve it.

    And GO VIKINGS!

  3. grudznick 2015-12-25 09:53

    The Vikings suck at the government teat worse than any other team. Most people ride the subsidized green line to the subsidized monolithic bird killing stadium to watch an inferior product owned by rich corporate fatcats who are getting the poor lottery-ticket buying citizens to pay for their wasteful stadium that these people can’t afford to attend without visiting a pay-day lender and mortgaging their next month because they are so uninformed.

    Happy Holidays.

  4. Jenny 2015-12-25 10:05

    The Vikings got it going on now, Grudzie. South Dakotans love the Vikings, and they will pay good money to see the boys and their new palace. I lot of money could have saved a lot of money by sharing a new stadium with the Twins. But you know corporate greed always win. But when they’re winning, it’s the best entertainment around next to SD dirty politics!

  5. Jenny 2015-12-25 10:07

    I meant to say a lot of money could have been saved by sharing a new stadium with the Twins.

  6. leslie 2015-12-25 11:09

    paul-sd’s tax scheme allows millionaire/billionaires to “own the view” too, and cheaper, if they like it– “you better own it” as they say…. but i agree with you too. woodruff is causing bear butte to be condominium-ized. we have seen how that doesn’t work year around in colorado, say nothing for preserving scacred landscapes.

  7. owen reitzel 2015-12-25 11:49

    SKOL VIKINGS!!!!

  8. caheidelberger Post author | 2015-12-25 19:22

    Paul, that’s a huge problem with property tax. Your rancher friend’s taxes shouldn’t go up just because his neighbors think they have a better idea about how to use his land. Do you know if your rancher friend’s land near Piedmont would meet the criteria for the non-cropland assessment proposed in SB 4?

  9. Paul Seamans 2015-12-25 20:03

    Cory, probably some of his land would qualify under SB4 but a lot of his land is bisected by Elk Creek and is sub-irrigated alfalfa ground. SB4 may have some possibilities. Many county assessors know their counties pretty well and will know if ground has been broke in the past 30 years or not. If land gets a tax break for being in grass and then gets broken out of grass a good assessor will be aware of that.

  10. Curt 2015-12-25 20:38

    Has the fiscal impact of SB 4 been estimated? There is no apparent offset for the revenue that would be lost. Anticipate more squealing from County Commissioners.

  11. Joe K 2015-12-26 03:29

    Well said Owen, SKOL VIKINGS!!!

  12. Richard Schriever 2015-12-26 11:33

    Living in a county that is heavily impacted by urban development, I can accept the county sales tax as a way to try to deal with the associated costs. One alternative that makes sense is a change to the nature of sales tax revenue sharing w/counties based on population and population density vs. simple property values. The other is, of course, a state income tax.

  13. caheidelberger Post author | 2015-12-26 15:38

    It’s early, Curt, but I would think someone would ask LRC for that fiscal analysis. I wonder if we have the data necessary for such an analysis (specifically, number of acres in grass).

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