As we get ready to enjoy paying 4.2% state sales tax instead of 4.5%, longtime economic justice advocate Cathy Brechtelsbauer wants us to remember that any legislators making the rounds at our Fourth of July parades touting this tax cut as the biggest in South Dakota history are mistaken:
Governor Janklow’s property tax relief continues to this day. South Dakotans in owner-occupied homes continue to benefit hundreds of dollars in reduced property tax each year. For some homes the benefit is in the thousands each year.
People generally do not realize that this tax cut has been ongoing since 1995, because the counties may not spell it out on the tax statement. (At least my county, Minnehaha, does not.)
Of course, we should realize that any property tax relief is actually a big money shift. Because property tax goes to counties, schools and cities, not to the state, the state sends general fund revenues (from sales taxes, video lottery, etc.) to school districts to cover for these homeowners’ tax reductions.
The cost to the state of this property tax relief surely adds up to far more than the cost of the new sales tax cut. It is possible that the state does not take the time and effort to figure the annual cost of this program. There was a time when it did. I made a flier about it in 2006 when I was suggesting that a cap on that property tax relief could fund a food tax cut. Back then the property tax relief program cost the state $122 million total, which was a $65 million tax cut for homes and $57 million for ag land. Back then the average tax cut per home that year was $315.
…Even though it is a shift, the relief is actually felt by the homeowners. When the program started, the house I live in benefitted over $800 in reduced property tax. Now, for 2022 we received over $1000 benefit [Cathy Brechtelsbauer, press release, 2023.06.27].
The only folks who get more than $1,000 in tax relief from the 0.3-percentage-point sales tax cut will be those who spend over $333,333 a year on taxable goods in South Dakota.
Wild Bill did what he said he would do, cut property taxes….then as the dust settled, he raised the mill levy and got away with it so the tax was even higher. Janklow was no friend to anyone but killer Janklow.
I’ve talked about that that Janklow “property tax cut” before in the context of a state aid to education increase and the revenue caps on local school districts. All this happened as multiple states faced property tax revolts over the course of the late 1980s to mid-1990s. In South Dakota there was a series of initiatives on limiting property taxes. All these initiatives failed, but they drove the issue. Also, there was an unequal distribution of education funding that generated lawsuits against the state.
Oregon and Wisconsin also faced their own property tax revolts and lawsuits. To address these issues several states all settled on similar state education funding mechanism: a method to limit local districts from increasing property taxes beyond a certain amount, while only partially backfilling the hole that education funding mechanism created, The promised increased state educational aid funding never covered the revenue hole that the local caps created. Thus, over the years the property tax cut was bought by an ever depleted K-12 education system. The kids bled so property owners could get their tax cut as Legislatures and Governors over the years failed to adequately fund education. It was a scam that wrecked education. That’s where your property tax cut came from.
Now get this: Janklow claimed the same money as a property tax cut, but out of the other side of his mouth he claimed it as an increase in state aid to education!
Thanks Cory and Donald.
It blows my mind how states, including South Dakota, have armies of education, business, accounting, demographic, and government “experts”; yet are unable and / or unwilling to improve education to first world nation status. Doing so is not rocket science.
Given that we had and are having a demographic hole with reduced student numbers in most SD schools, funds available for education ought to go further to improve education outcomes.
Positive P says, “South Dakota had a surplus of $115.5 million for the 2022 fiscal year with the general fund revenue finishing $72.3 million, or 3.3%, higher than estimates. When it comes to the state’s largest revenue source, sales tax, South Dakota finished the year with $36.6 million over estimates, growing 12% from the previous fiscal year.”
My state refunds this money to the taxpayers. Why doesn’t yours? Of course the Colorado Republican minority tries to stop the refund but they can’t.”
I think they will refund the money, Mr. P.h, but you have to keep all your receipts. All of them, and take them to the Office of Receipts. There’s a simple form to fill out there.
There are no receipts necessary in an honest state, grudz. If Colorado brings in more sales tax revenue than it predicted and budgeted to spend every taxpayer gets the same amount as a refund no matter how much they paid in sales tax.
If your state brings in more sales tax revenue than it predicted and budgeted to spend, your Governor just steals it.