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HB 1085 Almost Kills Our Smallest Farms with Higher Taxes; House Corrects Error

The South Dakota House of Representatives Friday saved truly small farmers from facing a big tax increase.

House Bill 1085 tinkers with the criteria for classifying and taxing farmland. In its original form and the form that emerged from House Taxation, HB 1085 would have declared any solitary farm lot (i.e., not connected to a bigger lot with the same owner) of less than ten acres not agricultural. Thus, all those nice garden farms cranking out produce for farmers’ markets in Spearfish, Brookings, and elsewhere, would have been classified as residential or commercial land, significantly raising their local property taxes.

Spearfish farmers Jeremy Smith and Tawnia Merkle and Dakota Rural Action lobbyists Rebecca Terk spoke against this small-farm-killing tax hike in committee last Tuesday but drew support from only two members, Rep. Jess Olson (R-34/Rapid City) and Rep. Ernie Otten (R-6/Tea). The other Republicans on the committee said, sure, let’s raise taxes on the smallest farmers.

The House evidently recognizes this error and barely blocked the bill on a 34–35 vote Thursday. Rep. Kirk Chaffee (R-29/Whitewood) showed some good sense and moved to amend the ten-acre minimum out of HB 1085. HB 1085 still includes a problematic addition to statute allowing county commissioners to set a minimum size of up to 160 acres to qualify for agricultural status, but smaller farms could still qualify for the lower ag tax rate under a separate gross income criterion of $2,500 made farming. Chaffee’s amendment passed, and the remade HB 1085 survived the House on a 41–27 vote.

Now keep an eye on this bill in the Senate. South Dakota bends over backward for large factory food production operations, but our legislators needs strong reminders that our smallest farms perhaps best embody our independent agricultural heritage.


  1. Rebecca 2021-02-08

    The House recognized (at least partially) the error thanks to a ton of behind-the-scenes organizing of local producers statewide. That’s still happening because HB 1085 is still a bad bill.

    There are plenty of serious small-acreage producers who will still be caught up in this platted subdivision issue–and some are in subdivisions platted in 40+ years ago. Sure, there may be a few folks who have a couple chickens and tomatoes (umm…a few more than a couple to make $2500 gross) who’re masquerading as ag to get that assessment rate. But this bill throws everybody off–even those small-acreage producers who’re pulling in 10x that amount. Heck, I did five figures gross ag production off less than an acre–if you have high tunnels and a little bit more land, you’re looking at the ability to do a lot more. But I guess that’s not “real” ag because it’s not a quarter section off a township road?

    How many folks on 40, 80, or 120 acres are doing a bit of haying or grazing (or leasing for such), eking out that $2500, and no one questions whether that’s “real” ag? Huh, come to think of it, how many acres do you need for a hog finishing barn? Five? I mean, they wouldn’t be permitted in a subdivision (they’re not always permitted in ag-zoned areas since they’re a conditional use in some counties), but I think a lot of folks would call that ag nonetheless. But vegetables or an orchard? Get outta here, says this bill.

    Some of the “big ag boys” are pooh-poohing small-acreage producers who’re likely generating more local tax revenue (farmers market sales are taxed in those munis) than they are. Punching down is not a good look. How many of those we don’t question as being “real ag” aren’t actually relying on ag as their sole or primary income? But we hear legislators suggesting we should ask that of small-acreage producers.

    If we’re going to be doing a serious overhaul of assessment in this state (which this bill represents), ALL stakeholders need to be at the table. Clearly, this did not happen–and it also didn’t happen with the equally-bad sister bill (1149) that would nail small tree farms/timber producers who have a lot harder time making that 3/5 year gross sales marker because of the nature of timber production cycles.

  2. Cathy 2021-02-08

    When I worked in the Forestry/ Horticulture dept at SDSU (long time ago), my boss explained that the state didn’t recognize anything as agriculture unless it had “tails or tassels”. Heard that a lot, actually. Tree farms, nurseries, truck farms, orchards, vineyards, etc, were the red-headed stepchildren in the ag world and routinely ignored, neglected and/or abused in favor of “Real Ag”. It was a disheartening place to work.

  3. Richard Schriever 2021-02-09

    I hear that Cathy. Back in the day – when I was very actively involved in Planning and Zoning revisions in Lincoln county, I proposed a new “zone” designated “Specialized Agriculture” that would apply to small farm/business combination operations like a fruit orchard, truck garden, vineyard, or tree farm with an on site store/stand/winery and so-on, of 60 acres or less. The revising committee considered it and “interesting idea”, but ultimately did not include that proposal in the revised zoning ordinances. I suspect for the same reason – it was not “serious” ag.

  4. pas 2021-02-09

    Way ta go Rebecca, proud of you!

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