PIERRE — Two pieces of a property tax reduction package prepared by South Dakota’s legislative leadership and the executive branch are moving forward, but one bill failed during votes on Monday as lawmakers began the final week of the annual legislative session.

The House of Representatives voted

42-27

in support of

Senate Bill 245

, which would pull future revenue from a scheduled sales tax increase from 4.2% to 4.5% next year into a relief fund for homeowner property taxes, and use nearly $56 million in one-time money to seed the fund before the sales tax increase.

The Senate supported

House Bill 1323

, which would reduce the number of petition signatures needed to force an election on a local government’s decision to levy property taxes beyond limits set by the state. The Senate passed the bill 19-15.

Both bills have to return to the opposite chamber for consideration of amendments.

The Senate rejected

House Bill 1253

, which would cap annual assessment growth for owner-occupied homes and commercial properties at 5% annually and reset assessments back to market value every five years. The bill failed with a 9-24 vote.

The bills are part of a broader,

five-bill legislative package

targeted at property tax relief.

Another bill

in the package, which would allow counties to implement a half-percent sales tax with proceeds going to homeowner property tax credits, is awaiting the governor’s signature after he proposed it and it received both chambers’ approval.

The legislative budget committee is scheduled to consider a fifth piece of legislation in the package on Tuesday.

The bill

would reduce maximum property tax levies for school districts.

SB 245 would capture revenue from the impending sales tax increase to deposit into a “homeowner property tax reduction fund” meant to reduce property taxes levied by school districts. The Legislature and then-Gov. Kristi Noem reduced the state sales tax rate three years ago but scheduled the reduction to sunset in 2027.

House Speaker Jon Hansen, R-Dell Rapids, told lawmakers on Monday that the bill would be an “investment in the people,” because it’ll give South Dakota homeowners more money to spend as they choose. Hansen, the bill’s sponsor and a candidate for governor, said that would lead to more spending and, therefore, more sales tax revenue. The state relies on sales taxes, while counties and schools rely on property taxes, and cities receive revenue from property taxes and sales taxes.

Some opponents said the legislation would favor wealthier, property-owning South Dakotans rather than lower-income renters.

Rep. Mike Weisgram, R-Fort Pierre, worried that automatically diverting future state revenue to reduce homeowner property taxes would come at the cost of other priorities, such as annual funding increases for state employees, Medicaid providers and public schools — which are known as the “big three” budget priorities. Lawmakers often

aim

to increase funding for the groups by 3% or inflation, whichever is less. An inflationary increase this legislative session would be 2.5%, according to the state Department of Education.

“We are just clawing to get 1.4% for the big three,” Weisgram said. “I don’t think any of us are proud of that.”

Hansen said the decision “is not an either-or” situation.

“We can help the property taxpayers in the state who desperately, desperately need it,” Hansen said, “and then I trust fully that this state is going to continue to grow and that we are going to be able to meet the needs of our core obligations of this state.”

The bill was introduced as an amendment to placeholder legislation last week, and it will head to the Senate for approval. The Senate narrowly rejected a

similar proposal

earlier this legislative session.

The version of House Bill 1323 that passed the Senate would set the number of petition signatures needed to force an election on an excess tax levy (often called an “opt-out”) for a local government at 2,500 or 5% of registered voters within its jurisdiction, whichever is less. The current threshold to refer decisions by a local government is 5% of registered voters in the district, without a 2,500 signature cap.

The bill’s sponsor, Sen. Taffy Howard, R-Rapid City, said it will still be difficult to refer decisions by a local government to voters.

“You’re talking dozens and dozens of volunteers, weeks of organized effort,” Howard said. “There’s not a lot of people that have been through that and can even organize that kind of effort. So it’s not a trivial bar.”

Because the bill was amended since it last appeared in the House, it’ll now go to the House for approval.

HB 1253 intended to provide South Dakota homeowners and commercial property owners predictable increases in their property assessments, which factor into property taxes they pay, over five year periods.

But opponents said the change would shift the property tax burden onto farmers and ranchers and surprise homeowners every five years when assessments would be re-based on market value, which could lead to double-digit increases in assessments.

This story was originally published on

SouthDakotaSearchlight.com.