Legislature Raises Property Taxes to Fund 1.3% Increase in Teacher Pay

The Legislature voted Thursday to raise taxes to fund K-12 education. But our wily legislators are shifting the blame for any higher taxes to local school boards.

House Bill 1056, passed Thursday in Pierre, raises the target teacher salary to $49,131.96, a 1.3% increase from the $48,500 target set in 2016.

Note that statute [SDCL 13-13-10.1(3)] says the target teacher salary should increase by the index factor of either the 2016 consumer price index for urban wage earners and clerical workers or by 3%, whichever is less. According to the Bureau of Labor Statistics, the annual CPI-UWECW increased 0.98%. The new target thus hopes to give teachers $156.66 more than statute would have required.

Note that in FY2017, the first year of Governor Dennis Daugaard’s teacher pay push, we fell short of the average target teacher salary by $2,875. How close we are to the target this year and how close we’ll get next year is anyone’s guess.

But the adopted target salary means K-12 education gets $5.4 million more than last year, which beats the zero increase that Governor Daugaard proposed in December. But check out where the increase comes from:

South Dakota budget writers on Friday approved a spending plan for the current budget year that would give K-12 education a 0.7-percent funding bump, a $5.4 million increase from current levels. Legislators in the House and Senate will have to approve the amendments to the budget for the fiscal year that runs through June 30.

On Thursday, legislators approved a 1-percent funding increase to education, which they indicated they would like to see benefit teacher pay. The effort to boost teacher pay will be offset by modest increases in property taxes [Dana Ferguson, “State Employees, Direct Care Providers to See Pay Boost Under S.D. Budget,” that Sioux Falls paper, 2018.03.09].

Property tax? Wasn’t the half-penny sales tax supposed to cover our effort to pull teacher pay out of the national cellar?

Usually the Legislature revises the maximum property tax levy for school district general funds downward each year to balance out increases in property values (see, most recently, 2017 SB 35). This year, House Bill 1056 increases those maximum mill levies:

• Owner-occupied: from $3.372 to $3.383;
• Agricultural: from $1.507 to $1.512;
• Other/Commercial: 6.978 to $7.001.

A separate levy for special education also goes up from $1.461 to $1.567.

Bob Mercer puts that in dollar terms:

The 1 percent increase requires more from the three property-tax levies for general education and from the one property-tax levy for special education.

The general-education levies payable in 2019 would rise:

• 50 cents per $100,000 of agriculture property;
• $1.10 per $100,000 of owner-occupied residential property; and
• $2.30 per $100,000 of other property.

HB 1056 also would raise the special-education levy by $10.60 for $100,000 of value for all types of property.

Increased enrollment of special-education students would have required $9.50 per $100,000 regardless, according to Rep. David Anderson, R-Hudson [Bob Mercer, “State Aid to SD K-12 Schools May Rise by 1 Percent,” Yaankton Press & Dakotan, 2018.03.08].

In other words, if you own a $200,000 house, you’ll pay a buck more into your school’s general fund and $21.20 more to support special ed. But legislators aren’t making you pay that—oh, no! If you corner your legislators and say, “Why’d you raise my property tax?” they’ll say, “We only raised the limit on the levy. Your school board members chose to raise your taxes to that limit. Blame them!”

It’s nice to see any effort to nudge South Dakota’s teacher pay toward maybe, someday, something like a regionally competitive wage (we aren’t there yet—and if anyone cries “cost of living,” I will get out the statistical crusher again). But it’s too bad the increased regressive sales tax we were sold in 2016 is turning out to be an unsustainable mechanism to get us to that goal and that our Republican Legislature has to raise taxes again to live up to even half of its promises.