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Senate blocks funds for study of actual-use value of ag lands

PIERRE -- State senators closed the door Wednesday against commissioning a study of converting to actual-use for setting tax valuations of agricultural land in South Dakota.

Senators voted 16 yes and 18 no. The measure, SB 4, needed 24 yes votes to stay alive. All of the opponents were Republicans and mostly from cities.

The original funding request was for $151,000 to contract with South Dakota State University's economics department.

The amount had been amended to $1 in the Senate Appropriations Committee in an attempt to keep the bill alive for further consideration.

The Legislature's permanent task force on agricultural land valuations sought the study. Currently, valuations are based on a productivity model that uses soil types and crop prices or land rents.

A member of the panel, Sen. Jim Peterson, D-Revillo, said he had pledged to bring an amendment to the full Senate but the negotiations fell apart.

Sen. Bob Ewing, R-Spearfish, supported approving the bill at $1 and sending it to the House of Representatives for further work.

"It's very important to me as well as to a lot of people in this state," Ewing said.

But Sen. Jim White, R-Huron, said the agreement didn't evolve. He opposed the bill because its purpose is to deviate from the current tax base.

"It resets the valuation for the property throughout the rest of the county," White said.

The effect could be $3.5 billion that would be shifted to other property owners, he said.

Sen. Billie Sutton, D-Burke, said actual use is a fairness issue but that wasn't the intent of the bill.

"This does not implement actual use. This simply asks for your approval to study the issue. We study issues up here all the time," Sutton said.

Sen. Gary Cammack, R-Union Center, asked the bill to be kept alive for further discussion.

"In the end, it affects the native grasses in eastern South Dakota and in western South Dakota," Cammack said.

Native grass is more valuable in eastern South Dakota because it's become more rare, according to Cammack.

"The taxation on that land has encouraged that land to be torn up," he said.

Sen. David Omdahl, R-Sioux Falls, said the change would be confusing and asked for the legislation to be killed.

Sen. Betty Olson, R-Prairie City, said her ranch is native sod that has been grazed forever. Olson said the taxes have doubled and her family is in a position where it must break up the land or sell the land.

"We need some study on this," she said.

There are "folks out there" who probably are receiving a windfall because they are being taxed as rangeland, Sen. Jason Frerichs, D-Wilmot, said.