Guest Column: The Simple Solution to Property Taxes by Rep. Will Mortenson (R-Fort Pierre)
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.
