January 28, 2020
Special Report:
Tax Levies for Taxes Payable in 2021 Set
Special Ed Levies Increase
(See important Business Day announcement below today's Capitol-ism message)
Schools are part of local government and are controlled by the local school board, right?
Sort of. It’s more like college students living at home for the summer. They are adults, free to do as they please . . . as long at their parents don’t mind and will keep sending money. School budgets are derived from an intricate set of local property taxes that are controlled by state law plus money from the state’s general fund known as “state-aid”.
Any reader that finds Einstein’s theories of relativity easy to grasp will have no trouble following how South Dakota funds schools. For the purposes of this report and for the average citizen, below is an early look at the taxes assessed this year, to be paid next year (2021), for school general fund and special education.
A Primer/Reminder. Property taxes are known as a “levy” or in the plural “levies”. One levy is a thousand/dollar or $0.001 also = to 1/10th of a penny. When applied to property and billed as a tax, this works out to be a tax rate that is “a dollar per thousand” dollars of property value. Who talks like that? Nobody, which is why this paragraph was written.
School General Fund Taxes
HB 1043 sets the statewide tax rate for taxes to be assessed this year but paid in 2021 as follows:
§ Agriculture land - $1.416 dollars per thousand – or - $141.60 for a $100,000 farm field.
§ Homeowners - $3.168 dollars per thousand – or - $316.8 for a $100,000 home
§ Commercial - $6.556 dollars per thousand –or - $655.60 for a $100,000 business.
Note – school general funds are the only property taxes in South Dakota that have different rates. Property taxes for city or county governments are assessed the same for all classes of property. So a county that collects a 5 mill levy or $5/dollars per thousand, and would cost a $100,000 farm field, home or business $500.
Another Note – it is early in the session, and the Department of Revenue says these numbers may change but only slightly.
These rates are LOWER than this year’s taxes. South Dakota keeps a lid on school property taxes by limiting the money from general fund taxes to increase “by inflation or 3%, whichever is less”. This has the effect of reducing the tax rate (dollars per thousand) as property becomes more valuable – which is one of the few things that everyone is hoping will happen.
HB 1043 reduces property taxes to be paid in 2021 as follows:
§ Agriculture land from $1.473 to $1.416 a reduction of 3.9%
§ Homeowners from $3.296 to $3.168 a reduction of 3.9%
§ Commercial from $6.821 to $6.556 a reduction of 3.9%
The following shows these rates applied to a property worth $500,000, with rates and taxes paid comparing this year to HB 1049 and the taxes paid in 2021.
General Fund Levy
• Property Levy Tax Payment Decrease
• Agriculture 1.437/1.416 $737/$708 $ 29 (3.9%)
• Homeowner 3.296/3.168 $1,648/$1,584 $ 64 (3.9%)
• Commercial 6.821/6.556 $3,411/$3,278 $ 133 (3.9%)
Note – the decrease in taxes on this chart assumes that the assessed value of the property remains the same. Any increase in assessed value will offset these decreases.
Special Education Levy
In addition to the general fund levy, each school district is allowed to collect property taxes for capital outlays (buildings, equipment and some operations up to a maximum of $3 per thousand); bond payments (for districts that have approved general obligation bonds) and to provide special education services. The demand for these services has been increasing dramatically which has increased the special education levy. This levy is applied to all classes of property at the same rate.
HB 1042 sets the levy for basic Special Education for taxes payable in 2021
§ Special Ed basic levy for 2021 = $1.684 dollars per thousand or $168.40 for $100,000 property
§ Special Ed basic levy for 2020 = $1.616 dollars per thousand or $161.60 for $100,00 property
Back to the $500,000 property above – applied equally to farm fields, homes and businesses. Special Education levy increase is:
§ Payable 2020 – 1.616 = $808
§ Payable 2021 – 1.684 = $842 an increase of $34 or 4.2%
Note – Special Education levies vary according to level of disability in a manner that is not explained in this Special Report and variations are based on levels of disability.
Summary. Below are two PowerPoint slides that summarize the changes in education property taxes discussed in this Special Report
BUSINESS DAY AT THE LEGISLATURE
THURSDAY, FEBRUARY 20, 2020
RAMKOTA HOTEL & CONFERENCE Center
2-3:30 PM - Business Caucus
3:30-5 PM - Time at the Capitol
5-7 PM - Reception and Program
Featuring 2020 Award Recipients*
Distinguished Legislative Service: Former Governor Dennis Daugaard
Business Legislative Advocate: Al Kurtenbach, Daktronics
Lifetime Achievement: Jerry Wheeler, Retired Executive Director, SD Retailers Association
Keynote Comments
Bob Sutton
President and CEO, Avera Health
South Dakota Chamber Board Member
7 PM - Adjourn
*Join us and help recognize the significant contributions that these
individuals have made to the business community in South Dakota!
|