In Will Mortenson’s column in the Pierre Capital Journal today, the District 24 State Representative has some big problems with Governor Larry Rhoden’s property tax relief proposal, particularly that “his plan is paid for by a new tax, rather than spending cuts, and the math checks out.”
The Rhoden Plan would allow the establishment of a county-by-county sales tax of up to 0.5%, which would then be used to reduce homeowner property taxes. Because it is permissive, the plan would result in different sales tax rates county-by-county, depending on whether and how much each county chooses to increase its sales tax rate. If all counties adopt the plan, it would reduce homeowner property taxes by about 20%, spread unevenly across the state.
The big problem with the Rhoden tax plan is where the real estate tax benefit falls, and who pays to provide that benefit. The Rhoden Tax Plan focuses property tax relief on the biggest houses in the biggest towns. It is hard to imagine a property tax plan that would be a more direct shift of dollars from rural South Dakota to the bigger towns, and from lower-income South Dakotans to high-net worth property owners.
and..
Just as prominently, the Rhoden Plan allocates the bulk of the property tax benefit to the biggest houses in town. The plan calls for the property tax cut to be proportional to assessed value. So, someone owning a $5 Million house will receive twenty times the benefit of someone living in a $250,000 house. Most of the concerns raised by citizens about property taxes have focused on the middle-class, senior citizen homeowners on a fixed income. The Rhoden Plan doesn’t prioritize middle-class South Dakotans, who might only receive a cut of $200 or $300, but instead allocates the vast majority of the property tax relief to the biggest houses in town.
This is going to be a challenging year to figure out what form of property tax relief might possibly work.
First of, schools are the biggest property tax burden. Second off, property taxes stay local and don’t go to Pierre. Third off, this is nothing more than political pandering when state legislation is being proposed and it’s pandering to the uninformed voter who has no idea how the property tax structure works.
All this property tax relief is a response, mostly fueled by drastic increases in certain counties. So if the increases went up proportionately, shouldn’t they come down proportionately? Hypothetical question: If you own a 500k house in Todd County and your taxes stayed the same should you receive the same relief ($400) as a person in Lincoln County whose taxes went up $2.5k?
Is this an honest legislator working through a problem in good faith? Or is this another Dusty minion doing his dirty work in hopes of an appointment?
Will is good people. He works in good faith. His concerns are valid and we need to find a better path. I don’t like the governor’s proposal. I also don’t like Dusty’s. Keep working on it!
Rep. Mortenson, isn’t your boy Dusty’s plan paid for with a new tax? Didn’t Dusty say “the first dollar and the last dollar should go to education” without saying what cuts he would make or taxes he would raise? Then he proffers a paltry $400 property tax plan on the back of an automatic tax increase that he doesn’t even have to advocate for because it’s automatic? Shouldn’t that automatic tax increase first go to education? No plan at all, there.
Valid Point! The .5 sales tax increase goes to the state for them to ultimately decide how to disburse the revenue. At least with Rhoden’s proposal, the counties can decide and then use the money as for relief. There are a few counties with big and small cities that have an issue that can be worked out but not a good enough reason to say no. Rhoden likes to say this is a rifle shot approach to address the handful of counties especially in the black hills that have seen ridiculous tax increases. Everyone has seen their home tax go up too much but some are just ridiculous. This proposal brings relief to the areas that must have it vs would like it. Conceivably all the black hills counties would see the increase in either proposal. I don’t see a lot of risk with those residents changing their shopping habits over .5 increase in sales tax. The visitors out there will contribute a great deal to offset the insane property tax increases. Spreading the relief around equally vs targeting doesn’t seem as effective.
Rhoden’s Rural Tax Shift
Can we break the property tax issue down to its core and rebuild it? Education is the piece that the state constitution guarantees and maybe that piece should be removed from the property tax equation. The state can consider ways to fund that portion.
If the argument for property taxes is that they pay for infrastructure, police and other city/county services (which is true), then why does the size of the structure or its value matter to the tax amount? The services are the same regardless of the house, with some exceptions depending on the structures use case. If it is to be equitable, just the land/lot should be taxed as the square footage or age of the house doesn’t really matter. The services to the lot are the same regardless. People might actually fix up their properties if they weren’t concerned about new siding jacking up their assessed value.
Then a county couldn’t take your house for unpaid back taxes. They could only place a lien on the land.
Yes there would need to be other taxes, or types of taxes, adopted to make up the difference, but at least they could be more accurately placed. Increases in building permits, etc. I clearly dont have it all worked out yet, but trying to apply the same approach to Rapid City vs a town like Lemmon doesn’t seem to make sense in our current structure.
Someone gets it. I like your rationale.
There is probably some revenue out there that won’t cost South Dakota residents a penny. Our massive secret trust industry has foreigners and non-South Dakota residents saving millions or billions by domiciling their trusts in South Dakota. These ultra-wealthy pay Sioux Falls lawyers to administer these trusts, but we get nothing more than that. One has to wonder why South Dakota would not harvest some of that value. Other than a few well-heeled (and well-connected) lawyers objecting to it.
Rhoden’s plan is not good. It takes away a progressive tax and replaces it with a regressive tax. This will be very detrimental to rural South Dakota where housing is less expensive and agricultural property tax pays the bills. The sales tax would go to the larger cities since most rural towns don’t have anywhere locally to shop. Bye bye schools.
800 lb gorilla ……………..Time for an income tax. That tax can be structure to make it fair for everyone.
It would require actual work to solve a lingering problem.
Culture war and the garden variety annual fear mongering bills are super easy. Intelligence required to prime them is minimal.
This twerp is just a shill for Howdy Doody. Not worth the time to read.