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Senate Afraid to Study Actual-Use Ag Land Assessment

When I visited Charlie Hoffman last August, the outgoing state representative and passionate prairie grasser said that the current agricultural land tax formula discourages grassland restoration and preservation and drives turning prairie grassland to row crops. Hoffman suggested our property tax system should look at actual use of ag land instead of potential use.

Toward that end, the interim committee that studied ag land assessment recommended Senate Bill 4, which would have funded research by SDSU economists on the impact of switching to an actual-use formula. SB 4 wouldn't change the tax system; it would just study a possible change.

Landowners, the Farm Bureau, the Cattlemen's Association, Ducks Unlimited, and the Izaak Walton League thought a study on actual-use assessment sounded like a good idea. The Corn Growers did not, and neither did the full Senate. Last Wednesday, the Senate killed SB 4 16–18. That may sound close, but remember that, as a bill planning to spend money (and Senate Appropriations had already one-bucked the original $151K price tag to keep the bill moving), SB 4 required a two-thirds vote, or 24 Senators. All 18 nays came from Republicans, who apparently not only won't implement a better tax system but won't even let us study possible improvements in our tax system.


  1. dbasel 2015.03.02

    Out here in western SD we have needed this actual use since the start of this new system. just because we have pockets of land that is suitable for corn doesn't mean I have to plant corn. but I am taxed like a corn farmer even when I have cows grazing on that land. I know our Sen. Rhoden worked on this the time he was in the senate and couldn't get it passed. It is a fight we will continue to wage.

  2. Douglas Wiken 2015.03.02

    Taxing farm ground on income basis is another kind of income tax rather than property tax. When lawyer, doctor, accountant, dentists, etc office space is taxed on income basis per square foot, then it might be time to tax farm ground the same way.

  3. Richard Schriever 2015.03.02

    FYI- urban property taxes vary by zoning - I.E., what the land CAN BE used for - not necessarily actual use. Maybe the ENTIRE property tax system should be based on actual vs. potential uses??

  4. Richard Schriever 2015.03.02

    And those office buildings are taxed on two criteria - one - land value (per square foot SALE/value price) and structural value (again - SALE price/value) - not on the basis of potential produced through any activities that may occur within them (income).

  5. jerry 2015.03.02

    My ranch ground and farm ground just went up 20%, to me, that is a lot of bump at one time. So now I need to go to those that lease the place and tell them I need more lease money, 20% more to be exact. That is kind of like the old days of health insurance with this kind of rate increase. I ain't seen a Democrat sending me the bill either. I would have at least liked to hear the tax and spend spiel that the right wing loves so much. So, what do I get for the 20%, not a damn thing. The teachers are still not getting any kind of decent wage for their work, the infrastructure is non existent. Where does it go?

  6. Deb Geelsdottir 2015.03.02

    Great link Jerry. Property rights, right righties?!

  7. JSR 2015.03.02

    Just want to show a typical example of why 20% increase in assessed value does not mean you charge your tenant 20% more. I pay taxes on several quarters of land both grass and cropland. i willuse grassland. If I average all my assessments, my average is under $1000/acre. But I will use $1000 for the example. Remember in SD we tax at 85% of assessed value. Also I will use my local mills,adding up county, school, township and JRWD to get 9.242 per 1000. School and township both have opt outs that are included.$1000/ acre assessed value goes up 20% to $1200.
    $1000 × 160 = $160000 ×85%= 136000×9.242/1000= $1256.91 of taxes
    1200× 160= 192000×85%= 163200×9.242/1000= $1508.30 of taxes if mills remain constant with a 20%increase of assessed values.
    That's a difference of 251.39. Or$1.57 an acre. if you were charging $50/acre for grass it would take a rent increase of 3.14% to cover the $1.57 not $10 which would be 20 %. Everytime we have a change in assessed value or a change of mills landlords go to there tenants and say taxes went up going to have to raise your rent 5,10, or $20. Do the math. Be in position that you know not one assumption,

  8. caheidelberger Post author | 2015.03.02

    And remember, your assessed value may go up 20%, but the county still can't raise the actual taxes by more than 3% or the index factor, whichever is less. See SDCL 10-13-35.

  9. scott 2015.03.02

    This is something that needs to be fixed. Taxing at potential or highest use is just not right. It ends up hurting other SD interests such as hunting. If this is not fixed and soon, grass land will need to be turned to farm land, if property owners do not want to loose revenue.

    Our legislators just do not seem to get anything done anymore, even with one part dominance. This issue and teacher salaries are 2 issues that need to be addressed. Instead the legislators are trying to overturn our votes or introducing silly legislation like allowing themselves to carry guns in the capital. I just shake my head.

  10. scott 2015.03.03

    Deb, it looks like our SD Legislator is starting to following these 7 steps. One thing the 7 step process misses is create diversion issue to distract from the real issues like all the weapons laws that popped up this year in the SD legislator.

  11. Richard Schriever 2015.03.03

    scott - I've said it before and will say it again - those gun bills are actually designed to do one thing and one thing only - attract campaign donations.

  12. Deb Geelsdottir 2015.03.03

    Scott and Richard, I think you are both right. Distract and Pander.

    Clearly Shock and Awe has been replaced.

  13. leslie 2015.03.03

    and so it goes "on the high coteau of eastern dakota"

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