When is the breaking point?

Greetings! Let’s talk property taxes, shall we? First off, let’s put things in the proper perspective. The state of South Dakota receives zero dollars from property taxes. All of our property taxes are collected by the county and dispersed to the different tax entities within the county. The state is funded by sales tax, federal monies, unclaimed property, etc., not property taxes.

My fix, or at least a lifeline to this out of control property tax crisis, was House Bill 1019. Basically it took state sales tax of 4.2 percent and raised it to five  percent. The $280 million the 8/10ths percent was going to be codified or ear marked for owner-occupied homeowners. This resulted in $417 reduction for every $100,000 of assessment, so a $500,000 assessed home would receive $417x5=$2,085 in property taxes reduction.

No cutting of any county services, no cutting of any town or city services and public schools remained untouched.

Tourists would pick up the tab for about one-third of this sales tax increase (ie: 15 million tourists each year spending $5 billion).

So let’s do it! Right? Well, sadly HB1019 was defeated in State Affairs Committee by an 8-2 vote. I then waited patiently for the other 19 property tax bills to get a hearing. Notice, I didn’t say fair hearing because all tax bills should go to the Tax Committee and not State Affairs. Anyway, I finally smoked it out (HB1019) for a floor vote.

The vote results were 35 yeas, 34 nays, one absent. We needed two-thirds, or 47 of 70 for passage. For the record, there were 34 representatives that voted against HB1019. You can look up the bill and the voting record by name at sdlegisla

ture.gov.

I’ve mentioned before, what we need to put our arms around is what would have happened to our state economy if every owner occupied homeowners had an extra $2,000 to $3,000 dollars saved on their property taxes. First, it would have enabled many to be able to stay in their homes. Second, it would absolutely skyrocket our state economy because of increased spending. Using our household as an example, if we got a savings of $2,500 in property taxes, I’d splurge and put a kicker trolling motor on our fishing boat. The cost is $5,000. So because of my property tax reduction, I would actually double my savings and purchase something I probably wouldn’t otherwise.

Does that make sense? There have to be others like me. Even if the property tax savings was the actual amount reduced, our economy would explode, and at five percent sales tax rolling, how many times within the counties and state?

I’ve had the experience of listening to everyone’s homeowner property tax horror stories, so it is payback time. Marcia and I are retired and live in a mobile home. We live on a one-acre lot located by Sheridan Lake.

So, how much is our property tax? Would you believe $5,443? Because we live in a mobile home, my insurance company, USAA, won’t touch us, and we pay higher than regular home insurance, a whopping $500 per month. Our house is a 26 year old manufactured home that is supposed to depreciate, right? My assessed value is $482,600. Of that, $100,000 is the lot assessed value.

In 2019 our home and lot had an assessed value of $216,900. So, in six years our assessed value more than doubled. What happens if this same increase occurs in the next six years?

This is an unsustainable situation and has revolt written all over it. The government can’t keep taxing people out of their homes.  

When is the breaking point?