Talks on property tax tweaks could re-balance education funding

• Sen. Stan Adelstein

Sen. Stan Adelstein

Talk about it

PIERRE — Business and agriculture lobbyists told a legislative panel Monday that informal talks are under way about adjusting tax levies for general education in South Dakota to produce a different financial relationship between the tax burdens on agriculture and commercial properties and owner-occupied homes.

But, they said, those adjustments shouldn’t be considered until the 2014 session or after.

Their comments came during a public hearing by the House Appropriations Committee on the general-education levies necessary to provide a 3 percent increase in the per-student allocation from state funding and local property taxes payable in 2014.

Agriculture property values are expected to increase by about 10 percent, triggering a decrease in the general-education levy on agricultural property.

Taxable values for owner-occupied homes and commercial property are expected to be flat, according to Jim Terwilliger, economist for the state Bureau of Finance and Management.

Terwilliger said the general-education levies on those two categories of property consequently would need to increase under the proposed changes in SB 28, the Daugaard administration’s levies bill.

Sen. Stan Adelstein, R-Rapid City, told the House panel it’s ridiculous that people pay twice as much tax on their homes for public schools as agriculture property owners do.

Adelstein wants to shift some of the burden from homeowners to agricultural property, by increasing the general-education levy on agricultural property and reducing the levy for owner-occupied homes, while raising the same total amount from property taxes for schools.

South Dakota Farm Bureau lobbyist Mike Held said “his back of the envelope math” indicates the Adelstein proposal would shift about $16.5 million of taxes from owner-occupied home owners to agricultural property owners.

Held said the goal in waiting a year is to “do it right” rather than “doing it on the fly” this year. “That’s the discussion we’ve had with the business community,” he said.

David Owen, president for the South Dakota Chamber of Commerce and Industry, spoke in favor of the current system.

He said the chamber supported the 18.5 percent requirement placed on agriculture’s share of general-education property taxes in 2009.

Owen said there is time but “not in this session” to work on re-balancing the categories of property.

Held said talks are under way with business groups about the agricultural cap. “We agree it should happen next year,” Held said.

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