South Dakota lawmakers nearly came up empty-handed on their property tax relief campaign pledges Monday, until they rescued one of several remaining bills from defeat.

Many lawmakers campaigned on property tax reform in the 2024 election, more than 20 bills were introduced this legislative session addressing the issue, and the governor convened a working group earlier this session to introduce a comprehensive property tax reform package. That bill from the governor was the only one left standing by late Monday, the first day of the session’s final week.

Lawmakers are responding to public calls for relief, largely from non-agricultural property owners. Since 2017, property tax payments have gone up 47% for owner-occupied homes and 36% for commercial property, while rising 3% for agricultural property. Ag land taxes have been held in check by a change from market-based to productivity-based assessments.

Lawmakers in the Senate and House of Representatives rejected other bills Monday at the Capitol in Pierre that would have provided varying amounts of property tax relief to South Dakota homeowners.

More: Larry Rhoden-led property tax reform would cap assessments, adjust freeze program

The House of Representatives reconsidered and approved, by a vote of 53-16, an amended version of what the governor has called his “rifle shot” approach to the issue, after the bill failed in the chamber by one vote earlier in the day. The legislation will now go back to the Senate for consideration of the amended language. 

Rep. Trish Ladner, R-Hot Springs, has been working to pass property tax reform for several years. She called the legislative proposal a “good first bite.”

“It’s not a solution to every issue,” Ladner told lawmakers on the House floor, “but it gives us the opportunity to pause the skyrocketing valuations and the bleeding that people are feeling.” 

Governor’s legislation passes with amendment

Republican Gov. Larry Rhoden’s bill would cap countywide residential assessment growth at 3% annually for five years, cap at 3% for five years the amount local governments can increase tax collections annually based on new construction (that five-year sunset and change to 3% were amended into the bill Monday), exempt some home improvements worth less than 40% of a home’s value from affecting assessments, and expand eligibility among disabled and elderly people for property tax relief programs.

Rep. Greg Jamison, whose own property tax bill failed Monday in the Senate, told lawmakers the Governor’s Office supported the amendment on the governor’s bill “to make something work.” It was enough to sway his vote because the amendment “lightens the load” for growing counties, but he’s still “concerned” about the limiting growth factor.

“But I don’t want to go home empty-handed either,” Jamison said.

Opposing lawmakers said the legislation is flawed because it primarily targets counties with the largest growth. Rep. Mike Weisgram, R-Fort Pierre, said the legislation aims to manipulate property valuations, which strays from “letting the market work.”

Rep. Liz May, R-Kyle, voted against the bill twice, saying that the solution is to cut spending by local governments or find new revenue streams.

“I hope when we step back in here next year, there better not be any more rifle shots,” May said. “I want a plan.”

Other bills rejected

Earlier Monday, the House rejected Senate Bill 191 in a 62-7 vote. The bill, from Sen. Amber Hulse, R-Hot Springs, would have rolled back assessments for some homeowners and capped assessment growth for all of them. 

Some lawmakers in the House made a last-ditch effort to revive a bill to lower property taxes and replace the lost local revenue by increasing the state sales tax. The House shot that effort down 42-27.

The Senate rejected House Bill 1235 in a 21-13 vote. The legislation, from Jamison, would have reduced local taxing districts’ annual inflationary property tax collection growth from a 3% cap to a 2.5% cap.

Opponents said the bill would limit counties, cities and school boards’ ability to meet their budgetary needs. Sen. Randy Deibert, R-Spearfish, told lawmakers the legislation is a “bad bill” that messes with a system “that’s not broken.”

“We have a summer study under a resolution that’ll dig into this and look under the hood,” Deibert said.

Both chambers passed a resolution earlier this session to create a summer task force to “identify impactful, substantive measures” to provide significant and lasting tax relief. The task force will include 16 lawmakers, a representative from the Bureau of Finance and Management, and a representative from the Governor’s Office.

Senate President Pro Tempore Chris Karr, R-Sioux Falls, said property tax reform is “one of the most important priorities” of the legislative session.

“We need to take a look at the whole picture of what’s happening,” Karr told lawmakers, “what forces are driving the property taxes to increase and what some of the mechanisms are that we can look at and consider to provide relief.”