SB 216 Vs SealSD Plan

April 5, 2025
Seal SD Liberty

Let’s dive into the two property tax relief plans: the current South Dakota Senate Bill 216 (SB 216), signed into law in March 2025, and the alternative proposal from the Seal South Dakota (SEAL SD) plan outlined in the link you provided (https://sealsd.com/2025/04/01/compare-taxes/), published April 1, 2025. The goal is to analyze how the SEAL SD plan might offer better long-term outcomes compared to SB 216, focusing on Custer County where possible, given your prior interest. I’ll digest both plans, then evaluate their long-term effectiveness based on structure, scope, and impact.

Digest of SB 216 (Current Plan)

SB 216, effective from 2025 for five years, is South Dakota’s enacted property tax relief measure:

  • 3% Assessment Cap: Limits annual increases in assessed value for owner-occupied homes to 3%, applied when taxes are payable (e.g., 2025 taxes based on 2024 assessments).
  • Duration: Temporary, expiring after five years (2029 taxes payable).
  • Scope: Applies only to owner-occupied homes, excluding commercial, agricultural, or non-resident properties.
  • Additional Relief: Expands eligibility for elderly/disabled tax freezes and limits levy growth to CPI + new construction (historically ~3–4% annually).
  • Intent: Mitigate rapid tax hikes driven by soaring home values (e.g., 42% statewide from 2019–2023), especially post-COVID.

In Custer County, with a median home value of ~$206,902 and a 1.26% effective rate, a 9% value increase (typical recent trend) would normally add ~$18,600 to the taxable base (~$234 tax hike). The 3% cap limits this to ~$6,200 (~$78 tax hike), assuming stable levies. However, levy increases (e.g., 0.05–0.10 points/year historically) could push total tax hikes beyond 3%.

Digest of SEAL SD Plan (Proposed Plan)

The SEAL SD plan, from a taxpayer advocacy group, proposes a more aggressive rollback and cap:

  • Rollback to 2020 Levels: Resets taxable values to 2020 assessments (pre-COVID boom), then caps annual increases at 2%.
  • 2% Assessment Cap: Limits yearly taxable value growth to 2% for all properties (not just owner-occupied).
  • Scope: Universal—covers residential, commercial, and agricultural properties.
  • Duration: Implied as permanent (no sunset clause mentioned).
  • Revenue Replacement: Suggests state surplus ($300M in 2025) and sales tax adjustments to offset local revenue losses, avoiding levy spikes.
  • Intent: Reverse pandemic-era valuation surges (e.g., 40–50% in counties like Custer) and provide broader, lasting relief.

For a Custer County home valued at $206,902 in 2024, a 2020 rollback might drop it to ~$147,000 (assuming a 40% increase since 2020). At 1.26%, taxes fall from $2,607 to ~$1,852—a ~$755 reduction initially. A 2% cap then limits annual growth to ~$2,940 (~$37 tax hike at 1.26%), assuming no levy changes.

Long-Term Analysis: SEAL SD vs. SB 216

Let’s compare these plans over a 10-year horizon (2025–2034), focusing on effectiveness, sustainability, and Custer County implications.

1. Tax Relief Magnitude

  • SB 216: Caps assessment growth at 3%, moderating but not reversing past increases. A $206,902 home in 2024 grows to $277,194 by 2034 (3% compounded), with taxes at ~$3,492 (1.26% rate, no levy hike). Savings vs. uncapped 9% growth (~$550,000, $6,930 tax) are significant (~$3,438 over 10 years), but baseline taxes still rise from $2,607 to $3,492 (~34%).
  • SEAL SD: Rolls back to $147,000, then caps at 2%. By 2034, the taxable value reaches $178,868, with taxes at ~$2,254 (1.26% rate). This is a ~$1,238 reduction from SB 216’s 2034 tax and keeps taxes below 2024 levels for years. Savings vs. uncapped growth are massive (~$4,676 over 10 years).

Edge: SEAL SD. The rollback delivers immediate, deeper relief, and the 2% cap slows growth more than 3%, compounding savings over time.

2. Scope and Equity

  • SB 216: Limited to owner-occupied homes, leaving ~30–40% of Custer County properties (commercial, agricultural, second homes) exposed to uncapped increases. This could disproportionately burden businesses and non-residents in a tourism-heavy area.
  • SEAL SD: Applies to all properties, ensuring uniform relief. In Custer County, where tourism drives commercial and second-home values, this prevents a tax shift onto uncapped sectors, maintaining economic balance.

Edge: SEAL SD. Broader coverage avoids inequity and supports a wider tax base long-term.

3. Duration and Stability

  • SB 216: Expires in 2029, reverting to uncapped assessments unless renewed. Post-2029, a 9% growth resumption could spike taxes (e.g., $277,194 to $439,000 in five years, ~$5,531 tax), erasing gains and creating uncertainty.
  • SEAL SD: No expiration, offering predictable, permanent restraint. Taxpayers can plan finances without expecting a 2030 cliff.

Edge: SEAL SD. Permanence ensures long-term stability vs. SB 216’s temporary fix.

4. Revenue Sustainability

  • SB 216: Preserves more local revenue by capping fewer properties and allowing levy flexibility. Custer County’s ~$10–15M annual property tax revenue (estimated) sees moderate pressure, but levy hikes (e.g., 0.05 points/year) can offset losses, potentially negating homeowner relief.
  • SEAL SD: Slashes revenue initially (e.g., a 30–40% taxable value drop could cut Custer County revenue by $3–6M). It relies on state surplus and sales tax shifts, which may falter if surpluses dry up (e.g., post-2025 economic downturn) or sales tax hikes face resistance.

Edge: SB 216. Less revenue disruption reduces reliance on untested funding fixes, though it may shift burdens back to taxpayers via levies.

5. Custer County Impact

  • SB 216: Mitigates tax hikes for homeowners (e.g., ~$78/year vs. $234 uncapped), but levy increases (historical ~0.05–0.11 points) could push bills up 5–7% annually, hitting $3,800–$4,000 by 2034. Non-residents and businesses face steeper rises.
  • SEAL SD: Cuts taxes sharply (e.g., ~$1,852 in 2025) and keeps growth low (~$37/year), holding bills near $2,254 by 2034. All property owners benefit, supporting tourism and rural stability.

Edge: SEAL SD. Deeper, broader relief aligns with Custer County’s growth pressures.

Conclusion: Which Is Better Long-Term?

The SEAL SD plan outshines SB 216 for long-term tax relief in Custer County and beyond. Its rollback reverses past surges, the 2% cap outperforms 3% over decades, and universal scope ensures equity—keeping taxes lower for more people (e.g., ~$2,254 vs. $3,492 by 2034). Permanence avoids SB 216’s 2029 cliff, offering predictability critical for homeowners and businesses in a volatile market.

However, SEAL SD’s revenue gamble—leaning on state surplus and sales tax tweaks—carries risk. SB 216’s narrower scope and flexibility make it more sustainable for local budgets, though less effective for taxpayers as levies erode gains. If SEAL SD’s funding holds (a big “if” given economic cycles), it’s superior long-term by delivering ~$1,200–$2,000 more savings per household over 10 years and stabilizing Custer County’s tax climate. Without that, SB 216’s cautious approach might endure, albeit with higher taxes.

What’s your take on the revenue trade-off? That could tip the scales.