Counties had a good news/bad news week in Pierre. Senate Bill 2, which would give counties a portion of alcohol tax revenues, made it through its first committee hearing, but House Bill 1006, which would have let counties impose sales tax, died in House State Affairs.
Senate Bill 2 did take a couple hits to ensure the state keeps the lion’s share of the alcoholic beverage fund. Senate Local Government cut the counties’ share from one third to one quarter. The committee’s amendment also struck an increase in municipalities’ share from one quarter to one third that might have served to grease a few more ayes. Possibly further weakening the appeal of SB 2 for legislators from more populous districts, Senate Local Government complicated the formula for distributing the counties’ share: where the original bill allotted the county money proportionate to population, SB 2 now allots 75% of that share by population and 25% in equal cuts to every county.
Let’s put that in real dollar terms. The hooch tax generates $16 million total (what? That’s all? See CAFR 2015, p. 26). The counties’ share would be $4 million. The following chart estimates the difference between how much each county would have received under SB 2’s original all-population formula and how much each county (listed in descending population order) would under the amended formula with its equal-share factor:
County | pop (2014 est) | SB 2 orig | SB 2 amend | difference |
South Dakota | 853,175 | $4,000,000 | $4,000,000 | |
Minnehaha | 182,882 | $857,418 | $658,215.36 | -$199,203.10 |
Pennington | 108,242 | $507,479 | $395,760.42 | -$111,718.12 |
Lincoln | 51,548 | $241,676 | $196,408.58 | -$45,267.51 |
Brown | 38,408 | $180,071 | $150,204.70 | -$29,866.21 |
Brookings | 33,314 | $156,188 | $132,292.78 | -$23,895.57 |
Codington | 27,938 | $130,984 | $113,389.27 | -$17,594.40 |
Meade | 26,951 | $126,356 | $109,918.71 | -$16,437.55 |
Lawrence | 24,657 | $115,601 | $101,852.37 | -$13,748.77 |
Yankton | 22,684 | $106,351 | $94,914.75 | -$11,436.23 |
Davison | 19,885 | $93,228 | $85,072.69 | -$8,155.54 |
Beadle | 18,169 | $85,183 | $79,038.76 | -$6,144.23 |
Hughes | 17,642 | $82,712 | $77,185.68 | -$5,526.54 |
Union | 15,029 | $70,462 | $67,997.65 | -$2,463.86 |
Oglala Lakota | 14,218 | $66,659 | $65,145.95 | -$1,513.30 |
Clay | 13,932 | $65,318 | $64,140.29 | -$1,178.08 |
Lake | 12,368 | $57,986 | $58,640.83 | $655.08 |
Roberts | 10,374 | $48,637 | $51,629.38 | $2,992.23 |
Butte | 10,298 | $48,281 | $51,362.14 | $3,081.31 |
Todd | 9,882 | $46,330 | $49,899.37 | $3,568.90 |
Charles Mix | 9,287 | $43,541 | $47,807.18 | $4,266.29 |
Custer | 8,445 | $39,593 | $44,846.48 | $5,253.19 |
Turner | 8,272 | $38,782 | $44,238.16 | $5,455.97 |
Grant | 7,241 | $33,948 | $40,612.88 | $6,664.39 |
Hutchinson | 7,200 | $33,756 | $40,468.71 | $6,712.45 |
Bon Homme | 7,023 | $32,926 | $39,846.33 | $6,919.91 |
Fall River | 6,845 | $32,092 | $39,220.43 | $7,128.54 |
Spink | 6,598 | $30,934 | $38,351.91 | $7,418.05 |
Moody | 6,367 | $29,851 | $37,539.65 | $7,688.80 |
Hamlin | 5,989 | $28,079 | $36,210.50 | $8,131.85 |
Dewey | 5,662 | $26,546 | $35,060.68 | $8,515.13 |
McCook | 5,649 | $26,485 | $35,014.97 | $8,530.36 |
Day | 5,588 | $26,199 | $34,800.47 | $8,601.86 |
Tripp | 5,512 | $25,842 | $34,533.24 | $8,690.94 |
Walworth | 5,511 | $25,838 | $34,529.72 | $8,692.11 |
Brule | 5,309 | $24,891 | $33,819.43 | $8,928.88 |
Kingsbury | 5,075 | $23,793 | $32,996.62 | $9,203.15 |
Marshall | 4,683 | $21,956 | $31,618.24 | $9,662.61 |
Deuel | 4,312 | $20,216 | $30,313.70 | $10,097.45 |
Gregory | 4,217 | $19,771 | $29,979.66 | $10,208.80 |
Corson | 4,182 | $19,607 | $29,856.59 | $10,249.82 |
Edmunds | 3,983 | $18,674 | $29,156.85 | $10,483.07 |
Lyman | 3,877 | $18,177 | $28,784.12 | $10,607.31 |
Clark | 3,645 | $17,089 | $27,968.35 | $10,879.24 |
Bennett | 3,430 | $16,081 | $27,212.35 | $11,131.24 |
Hanson | 3,419 | $16,030 | $27,173.67 | $11,144.13 |
Hand | 3,345 | $15,683 | $26,913.46 | $11,230.87 |
Jackson | 3,274 | $15,350 | $26,663.81 | $11,314.08 |
Perkins | 3,033 | $14,220 | $25,816.38 | $11,596.56 |
Stanley | 2,983 | $13,985 | $25,640.57 | $11,655.16 |
Douglas | 2,973 | $13,939 | $25,605.41 | $11,666.88 |
Ziebach | 2,826 | $13,249 | $25,088.52 | $11,839.18 |
Aurora | 2,745 | $12,870 | $24,803.70 | $11,934.12 |
McPherson | 2,429 | $11,388 | $23,692.55 | $12,304.50 |
Faulk | 2,357 | $11,050 | $23,439.38 | $12,388.89 |
Potter | 2,340 | $10,971 | $23,379.60 | $12,408.82 |
Sanborn | 2,336 | $10,952 | $23,365.54 | $12,413.51 |
Miner | 2,316 | $10,858 | $23,295.21 | $12,436.95 |
Mellette | 2,100 | $9,846 | $22,535.70 | $12,690.12 |
Buffalo | 2,077 | $9,738 | $22,454.82 | $12,717.08 |
Jerauld | 2,007 | $9,410 | $22,208.68 | $12,799.13 |
Haakon | 1,847 | $8,659 | $21,646.08 | $12,986.66 |
Sully | 1,438 | $6,742 | $20,207.92 | $13,466.05 |
Hyde | 1,396 | $6,545 | $20,060.24 | $13,515.27 |
Campbell | 1,386 | $6,498 | $20,025.08 | $13,526.99 |
Harding | 1,250 | $5,860 | $19,546.86 | $13,686.40 |
Jones | 975 | $4,571 | $18,579.89 | $14,008.72 |
SB 2’s amended formula reduces the take for our 15 largest counties and increases the take for the other 51. But remember—SB 2 still gives every county more than they are getting now.
One more SB 2 amendment: Senate Local Government decided to mandate that counties spend their alcohol tax share only on “county law enforcement, jails, state’s attorneys, public defenders, and court-appointed attorneys,” exactly the set of costs that counties say justifies their call for a cut of the alcohol action. Interestingly, no such mandate is placed on the cities’ or the state’s use of their shares of the alcohol tax.
Meanwhile, House State Affairs denied counties the potentially more lucrative opportunity to levy a sales tax. House Bill 1006 would have let counties impose up to a 1% sales tax. House State Affairs killed HB 1006 on a 10–2 vote.
Rep. Joshua Klumb (R-20/Mount Vernon) co-sponsored HB 1006. He participated in the 2015 summer study on county government that led to the above proposals. On Tuesday, Rep. Klumb said he sponsored HB 1006 merely for conversation’s sake and opposed letting the counties tax sales:
While he supports the general idea to address county funding, he said the proposed bill is not the solution.
“I don’t support the bill because it would create a patchwork of differing sales tax rates across counties and wouldn’t be doable,” Klumb said Tuesday. “Also, the counties that would need it the most probably don’t even have the sale generation capability to generate much revenue” [Evan Hendershot, “Klumb: County Funding Bill Not the Answer,” Mitchell Daily Republic, 2016.01.19].
Rep. Klumb’s patchwork argument seems stitched together on weak thread. There are more municipalities than counties, and municipalities can impose sales tax rates up to 2%, plus a gross receipts tax, bed and booze tax, and, apparently, rental car tax. The Department of Revenue appears to find that patchwork quite doable.
As for the capacity to generate revenue, let’s look at taxable sales by county for 2015, how much revenue a 1% sales tax could generate for each county, and what percentage sales tax rate each county would have to charge to raise the same amount of revenue it would get under the amended SB 2 booze tax formula (again, I sort by population to show the increasing difficulty smaller counties have in raising revenue):
County | Taxable Sales (2015) | 1% sales tax revenue | rate to equal SB2 booze tax share |
South Dakota | $16,578,562,287.17 | $165,785,622.87 | 0.02% |
Minnehaha | $5,191,342,310.01 | $51,913,423.10 | 0.01% |
Pennington | $2,997,833,494.63 | $29,978,334.95 | 0.01% |
Lincoln | $428,712,159.06 | $4,287,121.59 | 0.05% |
Brown | $890,353,344.53 | $8,903,533.45 | 0.02% |
Brookings | $623,369,037.51 | $6,233,690.38 | 0.02% |
Codington | $716,625,342.22 | $7,166,253.42 | 0.02% |
Meade | $257,224,435.85 | $2,572,244.36 | 0.04% |
Lawrence | $528,842,411.00 | $5,288,424.11 | 0.02% |
Yankton | $425,042,718.12 | $4,250,427.18 | 0.02% |
Davison | $550,128,575.30 | $5,501,285.75 | 0.02% |
Beadle | $319,406,477.97 | $3,194,064.78 | 0.02% |
Hughes | $376,845,602.56 | $3,768,456.03 | 0.02% |
Union | $147,586,125.94 | $1,475,861.26 | 0.05% |
Oglala Lakota | $29,820,238.42 | $298,202.38 | 0.22% |
Clay | $163,104,470.70 | $1,631,044.71 | 0.04% |
Lake | $192,333,949.64 | $1,923,339.50 | 0.03% |
Roberts | $82,021,223.21 | $820,212.23 | 0.06% |
Butte | $157,733,806.18 | $1,577,338.06 | 0.03% |
Todd | $42,693,828.28 | $426,938.28 | 0.12% |
Charles Mix | $116,617,757.96 | $1,166,177.58 | 0.04% |
Custer | $125,062,680.73 | $1,250,626.81 | 0.04% |
Turner | $74,030,295.94 | $740,302.96 | 0.06% |
Grant | $130,921,299.81 | $1,309,213.00 | 0.03% |
Hutchinson | $104,649,216.83 | $1,046,492.17 | 0.04% |
Bon Homme | $51,547,703.09 | $515,477.03 | 0.08% |
Fall River | $73,831,476.33 | $738,314.76 | 0.05% |
Spink | $72,282,457.20 | $722,824.57 | 0.05% |
Moody | $102,227,113.79 | $1,022,271.14 | 0.04% |
Hamlin | $48,177,841.83 | $481,778.42 | 0.08% |
Dewey | $50,745,952.02 | $507,459.52 | 0.07% |
McCook | $56,863,863.44 | $568,638.63 | 0.06% |
Day | $81,133,074.69 | $811,330.75 | 0.04% |
Tripp | $117,760,879.04 | $1,177,608.79 | 0.03% |
Walworth | $114,598,672.49 | $1,145,986.72 | 0.03% |
Brule | $100,702,353.27 | $1,007,023.53 | 0.03% |
Kingsbury | $58,401,693.17 | $584,016.93 | 0.06% |
Marshall | $65,258,578.17 | $652,585.78 | 0.05% |
Deuel | $62,498,109.00 | $624,981.09 | 0.05% |
Gregory | $60,573,750.67 | $605,737.51 | 0.05% |
Corson | $16,979,693.44 | $169,796.93 | 0.18% |
Edmunds | $53,135,564.45 | $531,355.64 | 0.05% |
Lyman | $39,532,488.46 | $395,324.88 | 0.07% |
Clark | $44,851,352.76 | $448,513.53 | 0.06% |
Bennett | $33,248,511.34 | $332,485.11 | 0.08% |
Hanson | $13,164,455.91 | $131,644.56 | 0.21% |
Hand | $44,100,939.98 | $441,009.40 | 0.06% |
Jackson | $21,859,000.04 | $218,590.00 | 0.12% |
Perkins | $49,554,427.12 | $495,544.27 | 0.05% |
Stanley | $65,472,881.41 | $654,728.81 | 0.04% |
Douglas | $47,484,366.83 | $474,843.67 | 0.05% |
Ziebach | $4,941,442.93 | $49,414.43 | 0.51% |
Aurora | $22,734,506.42 | $227,345.06 | 0.11% |
McPherson | $24,556,556.58 | $245,565.57 | 0.10% |
Faulk | $24,221,438.27 | $242,214.38 | 0.10% |
Potter | $36,112,601.67 | $361,126.02 | 0.06% |
Sanborn | $21,162,642.35 | $211,626.42 | 0.11% |
Miner | $22,357,131.15 | $223,571.31 | 0.10% |
Mellette | $6,411,058.70 | $64,110.59 | 0.35% |
Buffalo | $6,011,610.08 | $60,116.10 | 0.37% |
Jerauld | $27,543,214.84 | $275,432.15 | 0.08% |
Haakon | $46,777,092.22 | $467,770.92 | 0.05% |
Sully | $25,681,077.30 | $256,810.77 | 0.08% |
Hyde | $29,775,586.02 | $297,755.86 | 0.07% |
Campbell | $18,327,409.85 | $183,274.10 | 0.11% |
Harding | $12,453,522.30 | $124,535.22 | 0.16% |
Jones | $31,207,394.15 | $312,073.94 | 0.06% |
Ziebach County, which had the lowest taxable sales in South Dakota in 2015, is levying property taxes of $774,000 this year. A 1% sales tax even on their meager taxable sales base would give them another $49,000, a 6% increase, and twice as much as they will get from SB 2’s hooch tax share. I don’t think our friends in Dupree would sneeze at that revenue.
Bennett County, which has struggled to pay its bulls on a patchwork of taxable and non-taxable property, proposed $1.898 million for its general fund this year. A 1% sales tax would put $332,000 more at their disposal, a boost of more than 17%. That would fill a lot of potholes.
Statewide, 54 counties have the taxable sales base to generate ten times as much revenue with a 1% sales tax as they would get from SB 2.
On his interim committee’s own bill, Rep. Klumb appears to lack both imagination and spreadsheets. The data show that every county would get a great boost (in most cases, a much greater boost) from a 1% sales tax than they will from their SB 2 share of the alcohol tax. Every bit helps, but Rep. Klumb doesn’t appear to want to help the counties very much.
Nice work
Every time somebody brings up sales tax of any kind I have to ask, what about the $600 million the state gives away every year, why won’t they tap into that?
Nobody wants to gore those oxen, Tim. If those special interests were powerful enough to get those exemptions written into law in the first place, they are likely powerful enough to raise holy heck for legislators daring to revisit those exemptions now.
Because of course – operating costs for counties have NOTHING MUCH TO DO with it’s population size – OR geographical size – right?
So Cory, the answer is the most regressive we can have, lay it on the poor again. Aren’t average people in this state paying enough of the tab now? Just sayin.
I see that Mike Verchio has suggested an income tax to fund schools, property tax to fund local government, and sales tax to fund state government. “I Like Mike”.
Richard, do you know if there is a table that shows all counties’ operating budgets? I’d love to line those numbers up alongside population and taxable sales to see the exact correlation.
Tim, you do well to remind us that we are talking about more regressive tax. In that regard, we could say that House State Affairs spared us more bad tax. But they didn’t do so out of regard for good tax policy and resistance to regressivity. Rep. Klumb did so out of an apparent misunderstanding of policy and economics. What non-regressive tax bases are available to counties?
Corey,
You may be able to get that information from the US Census Bureau (Department of Commerce). They have a sort of generalized, state by state breakdown of revenues and expenditures at the county level here; http://www.census.gov/govs/local/ . I assume they have underlying data from individual counties this is based on, or at least know who in the state to ask for it.
Interesting: according to data that the Department of Legislative Audit presented to Rep. Klumb and the County Government Interim Committee last summer, over 70% of county general fund expenditures go toward carrying out activities mandated by state law. There lies the justification for the state at least authorizing counties to levy taxes, if not provide that funding from the state level itself.
Ah! And Exhibit C in this DLA document has the top-line budget figures for 64 counties. The most instructive figure may be per capita valuation, which varies from $2,400 in Oglala Lakota and $49,000 in Bennett to $338,000 in Hyde and $541,000 in Sully. In our most populous counties, per capita valuation is $64K in Minnehaha, $69K in Pennington, $84 in Lincoln, and $88K in Brown. The statewide average per capita valuation is $89K.
Also instructive is property tax revenue per capita. Oglala Lakota and Sully again define the range, $12 to $1,524 (there’d better be some awfully nice roads around Onida!), but the next placers are, at the bottom, Buffalo ($189) and Lincoln ($192) and at the top, Harding ($990) and Miner ($1,114). Minn/Penn/Brown go $220, $346, $384. Statewide average is $335.
Generally, bigger counties, smaller tax burden per person.
Isn’t it time to consolidate counties? Just seems to me that having only 5 or 6K residents in a county is silly. Wouldn’t a consolidation make sense financially? What are the pro’s and cons agains such change?
Interesting information
If we consolidate counties, maybe we need to make sure we buddy up rich counties with poor counties. :-)
If you set 5,000 population as your threshold, you consolidate 30 counties. Do we mash those small counties together with each other, or do we merge them with adjoining larger counties? Do we consolidate along existing boundaries, or do we divide up existing counties?
If you consolidate Jones, Jackson, the former Washabaugh and Haakon counties together you would probably still be short the 5000 minimum population. Probably 80 miles from east to west along I90. Do I complain to someone in Philip if my roads south of Draper aren’t plowed. That is if I were a complainer.
Paul, by my count, you get just about 6,000 from that consolidation… and a darn big county. I was playing around with the map, looking at consolidation options to reach 5,000 or maybe 7,500. If I try to keep from folding small counties into those with large populations, I get some awfully big consolidated counties. Harding and Perkins pose a problem: together, they only add up to 4,300 people. Combining each county with its southerly neighbor creates some long snowplow routes. Imagine it: Harding with Butte? Perkins with Meade? Driving from Lemmon to Sturgis to get to the courthouse?
Cory, I wonder how Meade County residents handle it now. Image living in Faith and being called to jury duty in Sturgis. Maybe we could learn from them.
I always like the story of the Texas ranch boy going to an Ivy league college. A professor asks the class if anyone knows where Deaf Smith County is located. Finally the Texas student answers, “it’s in the northwest corner of my grandpa’s calving pasture”.