The Simple Solution to Property Taxes
by Rep. Will Mortenson (R-Fort Pierre)
Property taxes are irritating. The tax notice comes in the mail twice a year, showing that you owe the county treasurer hundreds, thousands, or (if you’re lucky and own very valuable property) tens of thousands of dollars. You pay property taxes, even though you may have bought your house, farm, or business fifty years ago and paid off the mortgage twenty years ago. Because of the stark, high-dollar reminder and the fact that no transaction has taken place, property taxes represent more of a burr under South Dakotans’ saddles than about any other tax.
So, if we do not like property taxes and we want to pay less of them, how should we go about doing that? It is important to know that the State of South Dakota, your state government, does not spend one dime of property tax revenue. All property taxes are allocated to local governments, with about 90% spent in three areas: Law Enforcement, Schools, and Roads. The dollars are not going to some faceless paper-pusher; property taxes fund your teachers, sheriffs, city streets, and rural bridges. So, any real, responsible plan to reduce property taxes must replace the revenue instead of recklessly suggesting that our schools, cities, or counties simply cut their staff or their road budget by 25%.
The good news: a simple, straightforward solution has already been proposed. Last year, I co-sponsored a bill that would have cut owner-occupied property taxes by 35% for all homeowners without defunding the police, our schools, or our roads. The replacement revenue was an increase in the sales tax rate by 0.8%, moving us from 11th lowest in the nation to 18th lowest, and making our sales tax rate the same as North Dakota (still 1% lower than Nebraska). Despite the support of a couple dozen smart conservatives in the House of Representatives, the bill was opposed by Gov. Rhoden, the Democrats, and House Leadership, and was defeated. If it had passed, the property taxes on your home would be lower by more than one-third in 2026. Remember that when the notice comes this spring.
A consumption tax like the sales tax is the best replacement revenue. It is fair and consistent across the state. It allows frugal, conservative spenders to avoid paying some taxes, if they are willing to consume less. Another benefit: out-of-staters pay sales tax, from truckers passing through to visiting tourists to out-of-state corporations buying goods and services in South Dakota. While it may only account for ten or fifteen percent, tens of millions of dollars would be paid by out-of-staters in sales taxes that are now paid 100% by South Dakota homeowners in property taxes. Owing to that fact, the property-tax-for-sales-tax swap represents a clear and substantial tax cut for South Dakotans.
The best solution for reducing property taxes is a simple, responsible one, that replaces property tax revenue without defunding vital local services. This summer, ideas have been floated, ranging from a State Income Tax to New County Taxes to putting a 16.2% tax on eggs and bread (that last idea is proposed to go in our constitution!). Reducing property taxes for South Dakota homeowners can be achieved, but not at the expense of our law enforcement, not on the backs of our teachers, and not through income taxes or 15%+ taxes on groceries. If we are going to deliver property tax relief and tamp down the irritation of that semiannual tax notice, we need to keep it simple, South Dakota.
The KISSD method, Keep It Simple South Dakota!
Thank you Rep Mortenson for a dose of common sense!
Nobody in their right mind should vote for DoDoDoeden.
Why did Rhoden oppose this?
Capitulation. Rhoden was still trying to find his feet. He’s become the governor that wants to appeal to both sides. It’s not working. And it’s not leadership. He needs to pick a lane and hammer on it.
I suppose he didn’t want to risk any tax revenue since he was planning to chase a few billion dollars of investment out of the state by signing HB1052.
Open for opportunity my ass!
Huh.. an actual plan. So, the exact opposite of Toby.
I guess a dumb plan still counts as a plan.
Looking in the mirror again?
How and why is it a dumb plan? You’re walking, start talking.
That’s the best proposal I’ve seen, so far!
Honest question for Will, whom I respect and think is doing a great job despite the circumstances. What will keep the assessments from growing again to a point we are right back here? If the additional sales tax stops making up the budgeting difference, won’t assessments and mill levies just end up being adjusted by the counties to cover the spread. Then we will be paying high property taxes along with additional sales tax. I’m just concerned that we will end up back here without some kind of assessment and mill levy reform. I certainly appreciate the proposal and it is far better than anything I’ve heard pitched to this point.
Too many what ifs that may or may not happen. No sense in creating problems that aren’t there
We are talking about government here. All very valid concerns.
It will be impossible, based on what I’ve seen from the current Legislature, to get broad support for this or any proposal for that matter. Write the Legislation so that it can be decided by vote at a county level, or better yet, at a school district level. My district includes Keystone, Hill City, and Mt Rushmore. We generate a significant amount of sales tax and our school receives no state aid so not one penny comes back to the district.
Generally a good idea. Good point about property taxes quickly inflating back to current levels, so that would have to be addressed if the most recent cap doesn’t work.
I’m not a fan of regressive taxes like sales tax, especially since we tax essentials like food and clothing. How about a luxury tax? Expensive cars, private planes, boats, etc?
To add to this, the wealthy will see a larger dollar break while seeing a smaller sales tax percentage increase. The working class and poor will see a smaller dollar break and a larger sales tax percentage increase.
A 1 percent sales tax increase (still would have one of the lowest sales tax rates in the Region) could almost wipe out the public school mill levy on property taxes. One percent is an extra $10 on a $1,000 purchase. Regressive? Cmon. Even on a $100,000 purchased it would amount to an extra $1000. Don’t know how many poor people are making those type of purchases so it doesn’t even matter. For those that are struggling there are numerous programs to help them that my tax payer money funds. This is literally our only option, other than some sort of tourism tax to allow our visitors to pay for some of the services (roads, emergency services, etc) that they are using. With Tourism being our 2nd economic driver in the state, South Dakota sure hates taking money from them and would rather do it on the backs of homeowners.
Mathematically illiterate nonsense at its finest. Do you think rents will drop if property tax does? Are you naive or just stupid?
Eventually the market would catch up and rents would have to stabilize. Wiping out the school mill levy would definately help with more folks being able to afford homes and not rent if they choose. We all have choices.
It’s not literally the only option, first of all. Secondly the amounts don’t matter so much, it’s still classified as regressive because people with lower incomes pay a larger percentage of tax compared to someone making $400,000. Everyone has to buy food and this plan taxes well off people less than others, proportionately. If this plan excluded food and clothing perhaps under a certain dollar amount then I’d be more on board. But, this is a red state after all so the well-to-do make the rules in their favor.
I struggle with the term “regressive” on a scenario where there is a 1 percent raise in sales tax. Folks who are struggling utilize numerous programs (SNAP, EBT, commodities) that many of us pay for through federal taxes. An extra $1.00 on a $100 purchase in a state that has no income tax and one of the lowest sales tax rates in the nation doesn’t seem regressive in my mind.
There’s a literal definition:
DEFINITION
A regressive tax imposes a uniform rate regardless of income, leading to higher financial strain on low-income individuals compared to those with higher incomes. Unlike a progressive tax system where tax rates increase with income, regressive taxes like sales, excise, and payroll taxes affect everyone equally but take a larger portion from those who earn less.
Cool, cigarettes should cost less for poor people……got it.
Said no one. Way to jump to a straw man once you got your tail handed to you.
How about taxing non-necessities? 2nd properties? Why do we have to spread it to the poor and working class?
I’ll add to that. Taking a page out of the Yellowstone series, any out-of-stater who has vacation property in SD should pay a much higher rate than folks who live here. If they can afford a vacation property then they can afford the taxes for the property.
People talk about Yellowstone like it was a documentary. It was a soap opera, not a masterclass in policy or constitutional law. The Privileges and Immunities, Equal Protection, and Commerce Clauses might allow a slightly higher tax rate for out-of-state owners, but not the kind of massive hike suggested above.
But I have Larry Rhoden penciled into the South Dakota version for a role parallel to “John Dutton”!
Charles Mix County is the South Dakota version of “The Train Station”. It’s where powerful figures of the political establishment send their problems to vanish. Bodies and victims are more easily found than The Train Station in “Yellowstone”. But investigatory incompetence and cover up to the highest levels of government yield the same result as the hidden victims at The Train Station in “Yellowstone” – everybody’s rap sheet and reputation are kept clean.
This is just something an older neighbor down the street told me a while back. He and his wife purchased their home about 40 years ago. He was diligent and paid extra when he could and managed to pay the mortgage off, in full, in 25 years. He told me the amount of money he puts away each month to pay his property taxes alone is now more than his mortgage payment was 15 years ago.
It just doesn’t seem right to have to pay that much money to the government to live in your own house.
Imagine that, the people who accumulated mass amounts of taxpayer debt, bought into trickle down economics, never maintained infrastructure, and took a single income family lifestyle and peed it down their legs…….and we should feel bad for them. No Thanks.
Tell us you are an asshole without telling us you are an asshole.
What’s the matter? Are you cranky because mommy didn’t get your pudding cups or your hot pockets?
Why are you acting like a child?
Me thinks it’s because the comment was childish I
Nope. I am just not going to reward those who created all the problems and never paid their way.
Says the one who’s still living with mommy.
Remove the sales tax from food, clothing, and owner occupied housing. The government should not be in the business of taxing necessities.
If you are in favor of a consumption tax, why don’t you see that property taxes are a consumption tax? Those extra bedrooms and bathrooms are a form of consumerism, as are the mudroom, heated attached garage, and the water feature in the back yard. You would have to be blind to have failed to notice that some people live simply and others are living in elaborate, enormous homes.
If a wealthy person opts for a one bedroom one bath home and pays less in property taxes than somebody with a huge house with home theater and in-ground swimming pool, why is that a problem?
Your property tax bill is a lifestyle choice. If you want to reduce your property taxes, look around. Maybe you need to downsize.
This makes no sense. You buy a six pack of beer and pay sales tax on it once and consume it and you are done. You buy a home and pay tax on it over and over and over again. You don’t consume a bedroom?
You consume the streets, electrical, water, and sewer infrastructure. Is that going to pay for itself?
You already pay taxes on every aspect of land purchase, home construction, and furnishing. Why must we all keep paying indefinitely for the privilege of living in our own homes?
Though your house is paid off, the street in front still needs to be maintained in the summer and plowed in the winter. The police still need to patrol those streets and the the fire department needs trucks and equipment to enable them to respond to calls for service. Parks need to be mowed and city hall staffed. And that’s just in a city. We also have county services and our schools to pay for. Your property taxes and mine support this concept we call civilization. Thus ends the lesson.
There is no need to tax owner-occupied housing. The revenue can be generated elsewhere.
wait for it: somebody is going to come on here who says I need a big house with a family room and 7 bedrooms and 6 bathrooms and a huge backyard because I have six kids…in the public school….riding the school bus…taking showers, flushing toilets, generating 20 loads of laundry a week, and filling multiple trash cans, and I don’t think I should pay property taxes… and what do you mean I am paying for my lifestyle choices?
Nice strawman you built there.
He should have to pay taxes on it!
I have a pet peeve after a life time of paying gas tax property tax sales tax and other taxes why does SD have to tax funeral services a number of years ago I tried to find out how much the state gets from funeral homes that’s a secret in 1981 a funeral service cost 3100 dollars times 4 percent is 124 dollars today a funeral costs 15000 dollars at 6 percent you do the math
2025-1981=44. Do the math with inflation.
Taking OPs numbers at face value, simple math says 11%/year average increase in cost for a funeral.
No taxation of food, clothing, or housing.
Before the legislature consider an increase in the sales tax, I suggest a complete review of the many hundreds of exemptions of services and material, etc. that is not subject to sales tax.
I love how the GOP blames the Demo every day of the week. I think there is a total of 9 in the Senate/House
If I spend my money in Sioux Falls and live in Salem, how does that money go back to my school district? I’m open to being supportive of this proposal but there are lots of questions. Waiting for answers.
Spend your money in Salem if you want it to stay there.
2026 is a big election year. We have to look at the signs, hear and see the ads to no end and NO tax on political advertising. I think the politicians should start there, but they won’t change the rules and tax themselves oh no.
Here’s an idea: Put a 0.001% tax on all trusts. 🙂
$800 Billion x 0.001% = $800 Million ¯\\_(ツ)_/¯
https://www.sdpb.org/politics/2025-05-28/assets-in-south-dakota-trusts-top-800-billion
I believe $800B x 0.001% equals $8m.
Do you people really believe this “state doesn’t spend property taxes” claim? It’s all one pool, they get their money one way or the other. The solution is less government. All the fears the media has you worked up about would need to just be ignored by government in order to save money. So you want less taxes, worry less about Beavis and Butthead, Drag Queens, and Marijuana, make prisons only for people who are unfit for society (not people who annoy you) and promote good citizenship skills, which typically would be make it easier to raise good kids. This may include supporting parenting, childcare, education, it probably pays for itself more in the long term than a prison.
Spot on. Legislators absolutely play a big part in the Property Tax realm but they like to claim the state doesn’t collect or distribute property taxes. Particularly in deciding the state aid to education funding per their constitutional requirements. South Dakota over the years has chosen to become overly reliant on The Feds and local property tax owners and does a horrible job when compared to the rest of the nation on statewide funding of public education. As you said, our state has different priorities for spending and our revenue projections are looking bleak. On a related note it was funny to see Jon Hansen and his wife show up at the Hereford school and all of the sudden become Public Education advocates while throwing blame at the Meade school education board. Meade schools spend less than $10k per pupil on education, one of the lowest in the State. Our 2 largest Private Schools tuition in our area STARTS at that level. The Legislature’s actions as well as the Blue Ribbon Task force is partly responsible for the hard times with funding for these small schools. Maybe change the sparsity calculation at the legislative level to take care of these country schools. Ranchers, Jon and his wife don’t care about your public schools. You are nothing but campaign fodder to them. They just as soon take your tax money, that goes in the State’s Gen fund, you pay on your farm equipment and subsidize their own kid’s private education while not fully funding your public schools.
The minute I hear “lots of out of staters will pay” I hear the corollary “so we can keep lots of our special interest pork” often disguised as “quality of life amenities” that serve the rich and powerful.
A governing body delivering efficiently needed goods and services will have no problem getting tax revenues. Most of the people contesting tax levels are concurrently passing judgment one the job the governing body is doing.
The real problem with property tax is economic development. It has become an auction sale between states and local communities with the governing bodies offering the most incentives winning the bid at taxpayer expense, with the promise of tax relief to the local property owner that never materializes.
Replacing property tax with a consumption tax is a bogus story. I am tired of hearing that the visitors, tourists, and truck drivers passing through will pay for it. They spend their day or 2 in South Dakota and leave. residential taxpayers and property owners, for the most part, live here and will pay it 365 days out of the year. Simply put it is nothing more than a tax shift, payable daily.
There is no true capitalism when the taxpayer is burdened with paying indebtedness for a developer. The definition of “capitalism” is not inclusive of government handouts.
Property tax reductioin is a complex issue and must be addressed head on. It may put a hurt on some, but when they come to the realization that it must be done responsibly they will soon learn to live like the rest of us.
I know I have stated much of this in the past, but it didn’t seem to catch the eyes of the property tax committee this summer.
If property tax reduction is to work these issues must met and addressed as well or we will again being looking at the same issue again in the near future.
1. Put a moratorium on the creation and limit the use of TIFD’s, by local governing bodies beginning immediately. These things have proliferated one is never paid off before several more are created. 10 to 20 active TIFD’s in any local governing body is profound abuse.
2. Put a moratorium on the use and/or creation of any further discretionary tax formulas. A provision is also necessary to prevent the use of a discretionary tax formula in any TIFD.
3. Put a moratorium on the creation of any additional/new political subdivisions with taxing authority within local government.
4. Prohibit the creation of any new political/public subdivisions by the legislature.
5. Restrict/prohibit any new “opt outs” and freeze those already in place from renewing or expanding those opt outs.
6. Freeze levies for a period for those subdivisions already in existence, except if they should choose to lower the existing levy.
7. Freeze all specials and road use tax on real estate at current levels, unless it is a reduction.
8. Reduce bonding authority levels of all local governing bodies.
9. Restrict growth in local governing bodies budgets.
10. Restrict the BBB tax, BID tax, and city sales tax (just for starters) to current levels and prohibit the use of these taxes to only the general fund with an obligation to reduce property tax. it has become increasingly evident that many of these dollars are being used as a cash payout to and for developers with little or no regard for the taxpayer. Municipal sales tax was created by the legislature for municipalities as a means to supplement their general fund, not to be used as a cash gift for certain developers.
11. Require local governing bodies who have acquired real estate to get at minimum the price they paid for that real estate, rather than just a fraction of their actual cost.
12. Prohibit any political non profit agency with taxing authority from asking any other political subdivision with taxing authority for contributions.
This certainly is not a complete list, but it is a beginning. Many of these things need to be done for accountability at the local level. I blame the legislature for many of the problems associated to property tax increases through the enabling legislation passed in the name of “economic development” in the effort to lower property tax by growing the tax base. The whole issue of economic development is out of control and abused. This whole concept does not work, never has worked and will never work. Countless studies have indicated, time and again, that these issues cause an increase in taxation rather than a reduction.
I would guess that legislators know that but fear reprisals from the movers and shakers who fund their campaign war chests. They have little legitimate concern for the citizen taxpayer in this state.
Let’s have the “Will” to keep it simple. Property owners are not the only users of schools, law enforcement and bridges. Will’s plan is worth pondering. And, while you are pondering, property taxes on income producing properties i.e., VRBO’s, should have a different classification than non-income producing properties.