SIOUX FALLS, S.D. (KELO) — A panel of state lawmakers has set a goal to cut, by at least 50%, the property tax burden on owner-occupied homes in South Dakota.
Republican Rep. Jon Hansen, the House speaker who sponsored the resolution establishing the Comprehensive Property Tax Task Force, and who is an announced candidate for governor, called for the goal during the group’s meeting on Wednesday.
“To me our goal should be to slash property taxes by at least fifty percent,” Hansen said. He said the effort should start with cuts to state government programs, and then using those savings to increase state aid to school districts as a way to offset the part of taxes paid on owner-occupied property.
Hansen later said he would like to do “even more” for property tax relief.
Toby Doeden, an Aberdeen businessman who’s also running for the Republican nomination, has called for eliminating property taxes altogether. Doeden hasn’t yet said how he would do that.
Gov. Larry Rhoden, a Republican who hasn’t yet said whether he will run for a full term as governor, has suggested an optional county-sales tax as a way to reduce property taxes.
Property taxes were the top issue for voters in South Dakota’s 1994 election. The Democratic nominee, Jim Beddow, promised to cut property taxes by 30% during his first term. The Republican nominee, Bill Janklow, promised a 30% cut, too, but didn’t set a timeline. Janklow won and he reached it during his second term.
The question for the Legislature’s task force now is how to reach that 50% goal. Legislators split into three groups to look for ways during the group’s day-long meeting at Avera Hall on the USD-Sioux Falls.
The issue is complex and difficult to solve, said the panel’s chair, Republican Sen. Chris Karr. “The spider web touches a lot of different areas,” he said.
Karr acknowledged there’s no silver bullet. “What I do believe is, we can make it slightly better,” he said.
Others on the task force offered their ideas.
Republican Rep. Greg Jamison said many property owners want “a predictable tax bill.” He said that would allow them to plan better and help school districts and local government bodies.
Republican Sen. Taffy Howard said people should be able to know what their property taxes would be in 50 years. Howard, who attended Doeden’s candidacy announcement this spring, said on Wednesday that “a realistic goal” would be at least a 25 percent reduction and a larger cut would be better.
Republican Sen. Jim Mehlhaff said making home ownership more attainable to more people should be a goal and the most volatile portion is the amount paid for school districts. He said he wants to avoid as “much controversy and murkiness as possible.”
“I don’t think we’re going to cut our way to hundreds of millions of dollars in property tax relief,” Mehlhaff said. He favors establishing a statewide “education tax” that would be collected similar to state sales tax and a rate of 1% would more than eliminate the property tax burden for schools.
“It would be a dedicated fund for education,” Mehlhaff said, but he wasn’t sure as to how far it would reach, and what would or wouldn’t be subject to it. He said a 1% tax on all transactions could raise $1.1 billion.
The group learned in the morning that, on a statewide basis, property taxes rose by about $350 million during the past four years, from nearly $1.439 billion payable in 2020, to nearly $1.789 billion payable in 2024.
During that span, the share owed for agriculture property dropped to 20.4% from 26.1%, while the share owed for owner-occupied homes rose to 44.3% from 39.7%, and taxes owed on other types of property such as rentals, businesses and second homes, saw a smaller increase to 33.3% from 32.3%.
Property taxes are based on assessed value for each property. Assessed value of agricultural property dropped 0.45 across those four years, while assessed value of owner-occupied homes rose 58.39% and assessed value of other property went up 47.62%.
The overall result was that taxes payable on agricultural property went down 2.7%, while taxes payable on owner-occupied homes climbed 38.8% and taxes on other taxes rose 28.1%.
The shares of those taxes received by local governments didn’t change. Public K-12 school districts got the largest share with 56%, county governments continued to get 27%, municipal governments remained steady at 13%, townships got 2% and various special assessments totaled around 2%.
The committee also heard suggestions from a variety of people who testified Wednesday.
— Mick Baruth of Sioux Falls said the property tax exemption should be taken away from land and buildings owned by non-profit organizations.
— A Clay County commissioner, Geoffrey Gray-Lobe asked that county governments be allowed to charge sales tax on purchases made outside city limits.
Gray-Lobe also asked that the Legislature let the state 4.2% sales tax rate return to 4.5% when the temporary reduction expires on July 1, 2027, and dedicate the resulting additional revenue to county governments.
— A Lincoln County commissioner, Joel Arends, wants the Legislature to ask voters to amend the South Dakota Constitution, so that criminal fines would flow to county governments, rather than school districts as currently required, because counties pay the cost of enforcing and prosecuting offenders.
Arends also suggested that lawmakers stop requiring local governments and school districts to pay legal newspapers for publishing their meeting minutes and public notices, and instead allow those government bodies to publish on their own websites.
Arends also wants to make it easier for taxpayers to petition for local votes on opt-outs, which are efforts by school boards and local governments to raise additional taxes beyond the maximums set in state law. And he wants county registers of deeds to be able to keep the entire $5 fee charged for recording various documents, rather than having $2 of it go to the county officials association for redistribution.
— Erik Nelson, representing AARP South Dakota, asked that the age threshold to qualify for a homestead exemption be lowered from the current 70 years and that the $170,000 limit on the property’s value be raised.
A variety of municipal, school district and Minnehaha County officials also spoke against the growth caps that are in Senate Bill 216, a broad attempt at property tax reform that was proposed by Gov. Rhoden and a group of legislators during the 2025 legislative session. The Legislature amended and approved SB 216, and Rhoden signed it into law.
The task force meets next on July 17 in Rapid City.
