Forget Detroit; let's talk about a local South Dakota government going bankrupt. Peter Harriman offers a hefty article on the financial crisis of Bennett County. The southern South Dakota county doesn't have the resources to sustain county services.
The problem is only partly population. Bennett's 2012 head count showed 3,431 residents, more than 21 other South Dakota counties. The big problem is our tax system. The county's only source of revenue is property tax. A quarter of Bennett County's land, mostly in the northwest quadrant, is tax-exempt American Indian trust land. (The whole county was part of the Pine Ridge reservation until 1910, when Congress authorized the sale of land in what South Dakota declared Bennett County in 1909.) 45% of the county's population lives on that tax-exempt land, and only a quarter of the residents, 858, pay property tax. The county could opt out of the property tax cap, but they can only squeeze so much revenue out of that minority of taxable property holders.
The county would like to pursue other sources of revenue, like an alcohol tax, but Governor Dennis Daugaard refuses to allow anyone to pass new taxes:
“The governor is not in support of raising more revenue now at the local level,” Dusty Johnson said. “He does think opting out is an option for local governments” [Peter Harriman, "When a County Can't Survive," that Sioux Falls paper, 2013.08.04].
Suppose we authorized Bennett County to tax something other than land. Jump past alcohol to all commercial activity: Bennett County had $32 million in taxable sales last year. Allow the county a 1% sales tax, and they add $320,000 to their $1.4-million budget, enough to cover their shortfall. But the state will have none of that.
Neither will the state allow an income tax... though what income would Bennett County tax? Another part of the problem is the lack of jobs. There's not much work in Martin or Allen. The county is surrounded by the Pine Ridge and Rosebud reservations and the wide open empty of western Nebraska, offering few easy commuting opportunities. That lack of economic opportunity is driving up crime, which is driving up Bennett County's expenses.
(And don't forget: Bennett County is the North American continental pole of inaccessibility, meaning they are farther from sea ports than anyplace else on the continent. That's got to figure negatively on some economist's spreadsheet.)
It may well be that Bennett County, due to history, demography, and geography, lacks the resources to sustain a county government. Their situation may be analogous to the situation here around Lake Herman: some folks would like a central sewer system, but there just aren't enough residents with enough wealth to build and maintain such infrastructure.
So if Bennett County can't afford to provide physical and social infrastructure, maybe it's time to turn Bennett County over to a population that doesn't need infrastructure. Maybe it's time to cash in Bennett County's chips and found the Buffalo Commons. Assess one last double tax levy to administer a relocation program. Move the folks willing to move (with an additional incentive for folks who move who agree to stay in South Dakota). Make clear to folks who stay that there will be no county to plow or repave their roads.
Then turn loose all the buffalo we can find. Let the big critters re-establish the high prairie ecosystem that we've wrecked with fence and roads that we can no longer keep up.
And finally, cede the entire county back to the Pine Ridge Indian Reservation.
Harriman's article suggests there is no viable administrative solution for Bennett County. They don't have the wealth to sustain their county government. The state won't let them seek other revenue sources. Surrounding entities cannot or will not take on the costs of doing county business. So is Bennett County's only option to go out of business?
The buffalo may hope so.