Savor Dakota in Pierre: Senate Bill 7, Taxes on Land Used for Agriculture

Last Updated by Melissa Sievers on
Lt. Governor Matt Michels, President of the Senate
SDPB 2016

If you live in South Dakota and are not in the agriculture field, you probably are related to or know someone who is.  According to the South Dakota Department of Agriculture (www.sdda.sd.gov), there are 46,000 producer in South Dakota on 31,000 farms or ranches.  The average age of a South Dakota farmer is 57 years and the average size of a farm is 1,353.  Imagine a farm, and you likely picture an east river producer working through fields of grain or hay and feeding livestock.  Think of a west river ranch and images of rolling range land dotted by cattle is likely in your mind.

Land used for agricultural purposes has historically been taxed at a different rate than residential or commercial property.  Ag land has been defined if it meets two of three criteria: term of time that the land has been used in the pursuit of agriculture (three of the last five years), a minimum dollar amount derived annually ($2,500) and minimum size of unplatted land (20 acres or 80 if its part of a management unit.)  Same acreage numbers apply to platted land, excluding that in a subdivision.

A plat is a small piece of ground, or a plan, map, or chart of a piece of land with actual or proposed features, according to Merriam-Webster. 

Farming is changing in South Dakota and previous standards need to evolve.  Local food is a growing industry.  The look of a family farm is evolving.  Not all producers take on hundreds of acres to grow a crop.  More folks are farming on a few acres to work to feed themselves and sell to folks in their community. 

Lawmakers are working to change terms in state law with Senate Bill 7.  Legislators in the Senate discussed the measure on Tuesday, January 24, 2017.  The proposal is sponsored by  Senators CammackFrerichs, and Tidemann and Representatives QualmBartlingDuvall, and Rhoden at the request of the Agricultural Land Assessment Implementation and Oversight Advisory Task Force.  Its purpose is to revise the criteria for determining if property is classified as agricultural land for property tax purposes, making way for an evolving industry.

Senator Cammack presents Senate Bill 7 in Pierre, SD.Senator Cammack presents Senate Bill 7 in Pierre, SD.SDPB 2016

Senator Gary Cammack (R ) from Union Center explained to the chamber the changes that would come with the bill.  Senate Bill 7 makes agricultural use criteria mandatory.  Then either income or size benchmarks would need to be met as well.  The income generated from agriculture must meet at least 10% of the taxable value of the land in three of the previous five years OR an annual gross income of at least $2500. 

“Senate Bill 7 is definitely a small acreage friendly bill for folks who want to have enterprises on small acres,” said Senator Cammack.

Senator Jason Frerichs supports SB 7.Senator Jason Frerichs supports SB 7.SDPB 2016

“It’s very limited in nature and helps give reassurance to smaller agriculture producers, those who have limited tracks of land.   But, at the same time, hopefully its limited enough so that it doesn’t just open things up wide open for those who may have a horse in their backyard or something like that to still qualify,” said Senator Jason Frerichs (D), of Wilmot.

Of course, this example is used tongue in cheek.  There are standards in place to insure that a taxpayer making use of this feature qualifies. 

Frerichs continued, “I just want to share that this helps only to empower those who have taken advantage of the local foods movement that want to be able to have all sizes of agriculture available.”

Senator Bob Ewing gives an opposing statement to SB7.Senator Bob Ewing gives an opposing statement to SB7.SDPB 2016

Senator Bob Ewing ( R) of Spearfish offered some opposing comments from the perspective of a past county commissioner, “I’m just afraid that if we keep going down this road, the true spirit of agriculture is becoming less and less.  As I look at this, it’s almost as if you have a chicken in the backyard, you’re ag.”

Senator Frerichs spoke on behalf of the Department of Revenue, the legislation was crafted to only apply to those who, “have pure intent of utilizing that land for agricultural purposes.” The Department of Revenue was neutral on the issue last year and worked to adjust the standards for county assessors  this year.  Senator Ewing stood again and expressed concerns that these measures would greatly affect our tax base.   

Senate Bill 7 passed out of the chamber with a vote of 30-5 and will be discussed by members of the House of Representatives.

More information can be found through the Legislative Research Council, links to additional resources can be found at sd.net.  Audio from committee meetings are available online as well as the schedule for the house committee meeting.  Find bill history for SB7, along with future hearings, here.  South Dakota Public Broadcasting broadcasts from each chamber every day.

Watch discussion on the floor of Senate Bill 7 here: