S.D. ag-land assessment panel plans meeting Nov. 15 to consider potential 2020 legislation

Capitol News Bureau
crops farming farmland

PIERRE, S.D. (KELO) — The Legislature’s task force overseeing agricultural land assessments across South Dakota decided to meet again next month to talk more about any measures members want to offer for the 2020 session.

The group will gather November 15. Their chairman, Senator Gary Cammack, a Union Center Republican, asked that ideas be shared among members beforehand so serious discussion can happen that day.

The panel of legislators, local officials, business people and landowners that state law calls for got together for the first time this year Thursday at the Capitol in Pierre.

State Property Tax Division officials presented an analysis that the 2019 Legislature ordered showing potential changes in values of agricultural properties in various counties if different assessment methods were used.

“The purpose of the (state) Department of Revenue’s appearance at the Ag Land Assessment Task Force Committee’s meeting was to present data from a pilot study the department conducted as a requirement of 2019’s Senate Bill 4,” department spokesman Wade LaRoche said in an email Friday to the KELOLAND Capitol Bureau.

“The pilot study analyzed two different valuation models prepared by South Dakota State University using data from 11 counties throughout the state,” LaRoche continued. “The Department of Revenue has not taken a position on any of these methodologies, but we will continue to be a resource to the Ag Land Assessment Task Force Committee.”

County directors of equalization set the assessed value for each parcel of agricultural, owner-occupied and all other taxable properties in South Dakota’s 66 counties. County, municipal, school and other tax levies are applied each year to assessments, in order to raise money from properties for local governments.

The Legislature a decade ago scrapped the market-based system that had used comparable sales to set assessed values for agricultural properties. Lawmakers switched to a productivity system. It’s based on soil types and a rolling average of prices for each major crop or native grass.

State lawmakers eased the shift into place. One method was capping percentages that agricultural-property assessments could increase or decrease in a county each year. Taxes raised from agricultural property increased at a faster rate than they had been.

The presentation Thursday came across to some, however, as state officials prematurely shutting the door against changes. The analysis looked at the most-probable use and the actual use. The current system is based on highest and best use, regardless of how the land is actually used.

Jeremiah Murphy, a South Dakota Stockgrowers lobbyist, said the department generated good information but focused on weaknesses and threats, without presenting strengths and opportunities.

“The shifts are past tense. They happened to people,” Murphy said during public testimony. “We’re out of balance. Some of our taxpayers are carrying 30 pounds and some are carrying 10.” He added, “Some of us have seen this data (from the report) for less than three hours.”

Murphy asked that none of the possibilities be thrown out. “It’s urgent that we figure out the right solution to this problem,” he said. 

Other groups delivered similar messages.

Angela Ehlers, representing South Dakota’s conservation districts, asked the panel to consider changing to one table for all soils, rather than continuing with separate lists for cropland and non-cropland such as grazing ground.

Ehlers said one list would eliminate for county directors the management decisions made by landowners and lessees. She also urged that the remaining handful of counties — South Dakota has 66 — get GIS technology that SDSU experts consider necessary to switch to a more accurate method.

Brenda Forman from the South Dakota Association of Cooperatives asked the panel to continue trying to fine-tune the system. About the state analysis she said: “A lot of information to go through.” 

Cammack, the chairman, said after the meeting the panel wants to make sure county directors of equalization are using the flexibility state law gives them for adjusting values of agricultural land. He said many landowners need some relief on land that isn’t as productive as the soil types alone would indicate.

The Legislature created the task force in 2008, even before lawmakers had fully committed to the changing the system for agriculture. Cammack wasn’t yet elected when the change came.

“Because it was a newer idea, and we knew there were going to be kinks in this thing as we went along, we wanted to make sure that the Legislature had an opportunity to take a good hard look and see how it was operating and if it was working and if there was some adjustments that need to be made along the way,” Cammack said.

Current conditions in South Dakota’s agricultural economy are adding desperation to a property-tax system that already baffles many with its complexities.

“There’s a little more urgency on some of these adjustments, in light of the low commodity prices and also the low livestock prices. So, the taxation becomes a greater percentage of the total income of an ag producer,” Cammack said.

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