By Property taxes are expected to be a hot topic during this year’s legislative session, which starts Tuesday, Jan. 13 in Pierre.
But area legislators have varied opinions about whether a viable solution will be found during the 38-day run.
Perry
With more than 20 ideas circulating on how to offer some sort of property tax relief for homeowners, Sen. Carl Perry, R-Aberdeen, expects a lot of discussion, but said having so many ideas can either be good or confusing.
He cautioned that the ripple effect of reducing property taxes for residential homeowners is that taxes on other kinds of property or other types of taxes could go up. But he’s hopeful some type of resolution can be found.
MORE: Some doubt South Dakota property tax reform will come in 2026
Other legislators agree that a decision on property taxes is possible and say it wouldn’t affect the state budget. Instead, it would impact city, county and school board budgets, each of which rely on property taxes to provide services.
Much of the state’s budget comes from sales and excise taxes and fees.
Sen. Michael Rohl, R-Aberdeen; Sen. Mark Lapka, R-Leola; and Rep. Scott Moore, R-Ipswich; agree there will be plenty of discussion on property tax relief, though it’s unclear what will come of it.
Moore
Moore said a small change is most likely this year in preparation for a larger move in subsequent years.
“If we work together, we can get a lot of things done,” he said.
If the Legislature fails to take action, he said, the matter will likely be referred to a statewide vote.
There is already a citizen-initiated campaign to collect signatures that would put a constitutional amendment on the ballot to eliminate property taxes and replace that revenue with a new form of sales tax, which would be in addition to the state’s current rate of 4.2%.
Rep. Brandei Schaefbauer, R-Aberdeen, said she’d like to see property tax reductions for those who are 65 and older and veterans. She’d also like to see tax breaks that make homeownership more attainable, a cause also mentioned by Rep. Al Novstrup, R-Aberdeen.
Schaefbauer hopes one of the proposals already pitched will lead to some sort of property tax break.
Novstrup
Novstrup said property tax reduction proposals vary from minor changes to tax breaks for specialty groups.
“Beyond that, every proposal I’ve looked at is flawed,” he said. “You have government in need of a certain amount of money and taxpayers need less. There’s no magic formula.”
Knowing property taxes support local governments as opposed to the state, Novstrup said, “I’m opposed to ideas that break the system.”
Manhart
Rep. Logan Manhart, R-Aberdeen, said he’d like to see a vastly different tax system — one without property taxes. His preference, he said, is to get rid of property taxes and replace them with an external revenue source. That’s a topic championed by Aberdeen businessman Toby Doeden, one of four candidates campaigning for the Republican nomination for governor.
Manhart didn’t note any specific source of external revenue.
Data center discussion expected
Each local legislator agrees tax breaks for data centers will garner discussion, though many hesitate to back any plan for long-term discounts.
The Aberdeen area is feeling the effects of higher demand for hotel rooms and housing as a result of a data center complex under construction in Ellendale, N.D. Developers have said there’s interest in building data centers in South Dakota, and tax rebates on equipment purchases would make it more attractive.
Schaefbauer
“I’m totally against that,” Schaefbauer said. “If these billion-dollar companies want to come and they have billions to spend, they can pay South Dakota up front or have a reclamation savings account.”
She’s also concerned that, given the frequency with which data center equipment needs to be replaced, old equipment will start filling landfills.
Schaefbauer referred to data centers as “a huge boondoggle,” creating a lot of jobs up front for construction, but fewer for the operation itself.
MORE: Data centers, large ag operations can help SD lower property taxes, economic development experts say
“We’re spending millions in rebates for jobs that are not going to be permanent jobs,” she said.
Schaefbauer also wonders if data centers could be outdated in the near future as Elon Musk has pitched an idea to set one up in space that would be powered by the sun.
Moore supports the development of data centers, but not the idea of tax breaks.
“If they come, they need to bring their own (electricity) generation,” said the general manager of FEM Electric.
That could be via solar, wind or gas, he said.
“We don’t want to deter them from coming, but electric companies don’t want to pass along the expense of expansion to meet the demand if it’s going to be a short-term push,” Moore said.
Whether data centers deserve a tax break is just one of the questions needing to be answered, Perry said.
Novstrup said offering a tax break could be a form of negotiating. The latest proposal calls for a 50-year tax break.
“Historically, tax breaks have been for three to five years. Reasonable ideas are good. I haven’t seen a reasonable one,’ he said.
Rohl
A tax break aside, Novstrup said he wants to make sure electric consumers are protected and won’t see higher rates because of the electricity demand from data centers.
Rohl also wants assurances that electricity rates won’t increase because of data centers, but said he’d like to see a final proposal on data center tax rebates before offering an opinion on the idea.
Manhart said he’s not a supporter of data centers or tax rebates.
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“If they’re going to come, I want South Dakota to benefit from the tax revenue,” Manhart said.
Lapka
Lapka also said he doesn’t see the benefit of a tax break.
“A tax break is good for the data centers, but it’s a narrow benefit. I’m not sure it’s good for South Dakota,” he said.
Property rights rally, legislative coffees set
As has been the case in recent years, a property rights rally has been scheduled at the onset of the legislative session. It will be at noon on Monday, Jan. 12 under the Capitol Rotunda.
The rallies have been organized by those opposed to Summit Carbon Solutions running a carbon capture pipeline through the eastern part of the state. It appears that idea has been beaten back, but property rights advocates are still active.
In Aberdeen, a series of legislative coffees has been set during which residents can ask questions of state lawmakers from the area. The sessions were previously called cracker barrels.
The 2026 legislative coffees are at 10 a.m. in the Kessler’s Champions Club in the Barnett Center on the Northern State campus on Saturday, Feb. 7; Saturday, Feb. 21 and Saturday, March 7.
