A legislative task force is looking to cut property taxes by almost $900 million in the next legislative session. The group met to discuss how to achieve that relief.
A tax shift might be on the table, but it might not be a one-size-fits-all approach.
Currently, property taxes in the state fund schools, counties, cities and other local government funds.
That means a cut to property taxes is a budget hole local governments have to pick up. The Legislature is already receiving criticism for previous cuts this past session. At its first meeting, the property tax task force set a goal of relief to the tune of a 50% cut.
Task Force Member Sen. Jim Mehlhaff said they’re the ones called to provide tax relief.
“And the only way we are going to do that is if we find hundreds of millions of dollars that we can direct towards property tax relief, and there’s not a lot of places where you’re gonna find that,” Mehlhaff said.
He added they need to find the money and deliver the tax relief without creating a lot of angst for education and local governments.
The governor’s office presented an option for relief at the county level. Jim Terwilliger is the Commissioner of the Bureau of Finance Management. He said the proposal would give each county commission the option to directly reduce homeowner property taxes by replacing the revenue with a county sales tax up 0.5%.
“And that can provide anywhere from a 10% up to a 22% or 23% tax break for the homeowner," Terwilliger said.
He said it’s putting a new tool in the toolbox for the counties. He added it gets at the heart of the state’s property tax issues.
“A lot of the areas in the state where we have problems are either high-tourism areas or economic retail draws like Sioux Falls, Black Hills area. You have a lot of visitation occurs. You have people coming in and visiting," Terwilliger said. "Those people, whether they’re here or in-state, would be helping to contribute to that property tax relief.”
Rep. Les Heinemann said property tax funds support every county, and with that there’s a diversity of issues within each county.
“We also have gambling in my city, in my county. We get nothing from that, because that’s tribal owned. I’m saying that because I’m trying to show you, describe to you the diversity of the situations we have from county to county across the state. It’s mind-boggling," Heinemann said. "Every one of us in Moody County goes to Sioux Falls to spend all our money. They’re benefit of it, and our community is struggling.”
The task force’s next meeting is set for October.
