Some South Dakota counties say the cost of providing essential services is outpacing property tax revenues.
Kris Jacobson is Executive Director of the South Dakota Association of County Commissioners.
Speaking before a legislative committee studying the state's property tax, Jacobson said Monday that several South Dakota counties are going broke.
“There's potentially 15 counties across the state that are in financial dires, that are possibly contemplating bankruptcy,” she said.
Jacobson said that's due in part to a state law that restricts how much counties can increase property taxes each year.
“Due to the property tax freeze implemented in the 1990s, counties are at various taxing limitations in meeting their mandated responsibilities,” Jacobson said.
Counties decide the amount of property taxes they collect, which is known as a levy. The 1990's law, pushed by then-Governor Bill Janklow, restricts the amount a levy can grow each year — 3% or the change in the Consumer Price Index, whichever is lower.
According to Hughes County Commissioner Randy Brown, the law “essentially stuck counties where they were when the phrase was implemented.”
Brown said public safety is the biggest cost for Hughes County.
“The public safety sector of our budget makes up an ever-increasing share of our costs each year, he said. “Those costs include States attorneys, public defenders, court appointed attorneys, court ordered tests and other judicial costs.”
Brown said the county is looking at a $4 million deficit for fiscal year 2023.
State Rep. Lance Koth, R-Mitchell, suggested counties should look to consolidate services with each other.
Brown said his county is already working to create a joint ambulance district with Stanley County.
“That would lessen some of the burden, but it’s minimal compared to the rest of it,” Brown said, estimating that Hughes County has about a year of reserves before it goes into the red.
Jim Lintz is a County Commissioner from Custer County. He said properties in the southern Black Hills are assessed at high values, which means the county receives less money from the state.
“We have high property values and a low number of students,” Lintz said. “We’re spending a little over $12000 per student, we’re getting $300 for student need from the state.”
According to Lintz, Custer County struggles to pay for the services needed to support the tourism industry.
“The services required are much greater than they are for 7800 people,” said Lintz. “We're trying to tax, on a local level, people that don't have the ability to pay the tax."
