The Mitchell school budget is nearly set. Will your property taxes go up? How are they even determined?

Figuring property tax impact can be tricky, experts say

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Calculating the impact of property taxes on consumers can be tricky, say experts.
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MITCHELL — The Mitchell Board of Education will give final approval to the 2022-23 school budget in the upcoming weeks. For school administrators, that means the framework for district revenue and expenditures for the upcoming year will be in place, paving the way for another year of paying the bills in order to educate students.

But for district patrons, it usually begs a question: Will my taxes go up?

The answer, as it often can be with taxes, is not so straightforward, according to Steve Culhane, business manager for the Mitchell School District.

“I would say that the levies are projected to go down slightly, but the assessed valuation is going up. So even though the levy is going down somewhat, most people will likely see a slight tax increase,” Culhane said.

It’s the balance between assessed property value and tax levy requests that is at the heart of what a property owner will find on their yearly property tax bill. It’s a complicated process involving complex formulas, estimations and the ever-increasing expenses of ensuring students in a school district receive the best education they can for the taxpayer’s dollar.


The Mitchell School District is a tax jurisdiction that resides inside portions of Davison County and Hanson County. It is one of several tax jurisdictions in the area to which residents pay taxes for services, others being entities such as water districts.

Property valuation

The first step in determining property taxes is to establish the full and true value of all property within the boundaries of the district. State statute requires property to be assessed at its market value, which is the amount the property would likely sell for if sold on the open market. That figure is then equalized to 85% for tax purposes.

The value of land can change from year to year, said Karla Love, director of equalization for Davison County.

“Each year, the Davison County Equalization Office reviews properties for changes and revalues those properties based on current market conditions. As market values change, in general so do assessed values,” Love said.

Those values can change for myriad reasons. The property in question may have physically changed or the market itself may have changed. Adding a garage to a home would likely increase the value of the property, and therefore it would see an increase in valuation. Property that declines in condition or falls into disrepair over the years may see a reduction in valuation.

Assessors take a number of factors into account, including the amount of land a taxpayer owns, the location, the number and size of improvements on the land and the physical characteristics of the improvements.

“That information is used to estimate the market value of property by comparing the sales price of similar properties, estimating the cost to construct your property and calculating the potential rental income your property could generate, if any,” Love said.

Love said her office — which is made up of three full-time assessors, herself, an administrative assistant and a database coordinator — try to assess a property once every seven to eight years, though it can sometimes be longer between assessments.


School districts in the state receive the total valuation of property figures within the district as part of their budgetary process. That’s where district business managers also start their process of determining what they can generate in local taxes to support the district.

“Each year the state sends out to the district the school valuation — the values of those properties,” Culhane said.

The total official valuation of property within the Mitchell School District in 2021-22 was $1,532,987,533. But because of the timing of when the latest valuations are completed and when the board of education approves its yearly budget, Culhane and other school business managers work based on an estimate of what they believe the valuation will be for the next year.

In the case of the 2022-23 year, Culhane is anticipating a valuation of $1,555,680,304, or an increase of about 1.48%

2022-23 Proposed Mitchell School Budget by inforumdocs on Scribd

Levies and tax requests

The state legislature sets the maximum levies that school districts can apply on a yearly basis, so those figures are also changing regularly. The legislature knows that property values generally trend upward, so to keep property taxes relatively stable, they adjust the levies lower to maintain a balance and to keep taxes from rising or falling drastically.

For the 2021-22 school year, the Mitchell School District applied a total levy of 6.081 on ag property over the general fund, capital outlay fund and special education fund. Culhane estimates a total ag levy of 5.975 for 2022-23, a decrease of 1.74%. A 2.09% decrease is also estimated for owner-occupied property and a 0.60% decrease is estimated for commercial property.

An analysis of tax requests from the Mitchell School District shows that estimated requests for the 2022-23 year will come in at $6,152,246 for the general fund, a drop from $6,158,330 from the previous year; $4,665,998 for the capital outlay fund, an increase from $4,395,469 from the previous year and $2,487,000 for the special education fund, a drop from the $2,561,000 requested last year.


That’s a total of $13,305,244, a 1.45% increase over the previous year that stood at $13,114,799.

The total tax request for 2013-14 came in at $11,305,874, for an overall increase of $1,999,370 since that time. That averages to an increase of about $199,937 per year.

The higher the cost of operating the school district, the larger the revenues required from property taxes. Revenues from property taxes, combined with other monies such as federal grants, must equal the size of the budget of the unit of government, according to the South Dakota Department of Revenue. Property taxes are used to make up the difference between the cost of operation and what the district receives in state aid.

The levies are different for different funds, such as the general fund and the capital outlay fund. Culhane used an example of the district special education budget.

“For special education, we know the estimated valuation is $1.5 billion. And we know that the state lowered the special education levy. This tells me that based on the levy and total valuation our special education request will raise just under $2.5 million,” Culhane said.

A tough question to answer

Culhane said he strives to be conservative in his estimation figures on what the district will need to secure in property tax funds, and the impact on local taxpayers can vary from year to year. There are many factors to what a resident will find for a total on their tax bill, and it generally comes down to the status of individual property owners.

If the rate at which an owner’s property increases in value outpaces the rate at which the state and school lower levy requests, their taxes for the school district portion of their taxes will go up. In that case, the more property an owner has, the more it increases. If the value falls at a faster rate than levies are raised, their taxes come down.

The rates associated with other tax districts that have nothing to do with the school district can also change an owner’s tax bill.

That’s why it can be hard for Culhane to tell patrons, or the board of education, just how the yearly levy requests will impact an owner.

“The levies go down every year and the values tend to go up. The state tries to (lower levies) so that you don’t have a huge tax increase, but again, it all depends on each individual situation in terms of property,” Culhane said.

Susan Kiepke, auditor for Davison County, agreed that property valuation is perhaps the most important factor in determining an owner’s property tax bill. Her office is tasked with taking figures from the office of equalization and levy details set by the state legislature to calculate individual tax bills.

“Valuation is the main thing. For the school levies, I get the maximum numbers from the state — what those maximums can be and plug them into my computer. The computer does most of the work,” Kiepke said. “But there are various (other) entities that also get tax dollars. Fire districts, townships, counties. There are many facets to your tax bill.”

Again, it comes down to the individual landowner, their holdings and the condition and value of their property.

“Will my taxes go up?” As much as they wish there were a firm answer to that question, Culhane and Kiepke are both likely to answer with “It depends.” They understand that a lack of a firm answer can be frustrating, but it’s an unfortunate part of a necessary but complicated system that is crucial to ensuring that important services — such as the Mitchell School District — is funded adequately.

“There isn’t just a one-size-fits all answer,” Kiepke said.

Erik Kaufman joined the Mitchell Republic in July of 2019 as an education and features reporter. He grew up in Freeman, S.D., graduating from Freeman High School. He graduated from the University of South Dakota in 1999 with a major in English and a minor in computer science. He can be reached at
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