Statewide Analysis

April 5, 2025
Seal SD Liberty

Alright, let’s expand the scope from Custer County to a statewide analysis, comparing the South Dakota Senate Bill 216 (SB 216) and the SEAL SD plan (from https://sealsd.com/2025/04/01/compare-taxes/) across South Dakota. We’ll assess their long-term effectiveness—say, over 10 years (2025–2034)—for property tax relief, using available data and trends. I’ll digest both plans again briefly for clarity, then evaluate them statewide on relief magnitude, scope, duration, revenue sustainability, and broader implications.

Recap of the Plans

SB 216 (Current Law)

  • Key Feature: Caps annual assessment increases for owner-occupied homes at 3% for five years (2025–2029 taxes payable).
  • Scope: Limited to owner-occupied homes (44% of 2024 property tax burden).
  • Extras: Expands elderly/disabled relief (e.g., assessment freeze income limits to $55,000/$65,000, home value cap to $500,000); caps levy growth at CPI + new construction (~3–4% historically).
  • Duration: Temporary, expires 2030 unless renewed.
  • Context: Addresses a 47% tax increase for homeowners since 2017 (vs. 36% commercial, 3% agricultural).

SEAL SD Plan (Proposed)

  • Key Feature: Rolls back all property assessments to 2020 levels, then caps annual increases at 2%.
  • Scope: Universal—covers owner-occupied, commercial, and agricultural properties (100% of tax base).
  • Duration: Implied as permanent (no sunset).
  • Revenue Plan: Uses state surplus ($300M in 2025) and potential sales tax adjustments to offset local revenue losses.
  • Context: Targets a 40–50% valuation surge since 2020, aiming for deeper, broader relief.

Statewide Analysis: SB 216 vs. SEAL SD

1. Tax Relief Magnitude

  • SB 216: Moderates future growth without reversing past increases. Statewide, owner-occupied homes (valued at ~$112B in 2024) face a 9% annual value rise (per 2019–2023’s 42% over four years). At 3%, a $200,000 home grows to $268,783 by 2034, with taxes at ~$3,386 (1.26% median rate, stable levy). Without the cap, it’d hit ~$533,000 (~$6,716 tax), saving ~$3,330 over 10 years. Taxes still rise 34% from $2,520 in 2024.
  • SEAL SD: Rolls back to 2020 (~$142,000 for that $200,000 home, assuming 40% growth since) and caps at 2%. By 2034, it’s $172,694, with taxes at ~$2,176—$1,210 less than SB 216’s 2034 tax and below 2024’s $2,520. Savings vs. uncapped growth are ~$4,540 over 10 years.

Edge: SEAL SD. The rollback cuts taxes immediately (e.g., ~$750/year drop in 2025), and 2% caps save more long-term than 3%, especially as compounding widens the gap.

2. Scope and Equity

  • SB 216: Covers ~400,000 owner-occupied households (44% of tax burden), leaving commercial (31%) and agricultural (20%) properties uncapped. Since 2017, homeowners’ share rose from 39% to 44%, while ag dropped from 27% to 20%. This could worsen—uncapped sectors might shoulder more as home assessments lag, shifting burdens in high-growth areas like Sioux Falls or the Black Hills.
  • SEAL SD: Applies to all ~$250B in taxable value (2024 estimate). It resets everyone to 2020, preventing tax shifts. Agricultural land, taxed on productivity since 2008, gets relief from any market-driven spikes, while commercial properties (e.g., Rapid City businesses) avoid SB 216’s potential squeeze.

Edge: SEAL SD. Statewide equity benefits all taxpayers, avoiding SB 216’s risk of skewing burdens onto farms and businesses.

3. Duration and Stability

  • SB 216: Five-year cap ends in 2029. Post-2030, if 9% growth resumes, that $268,783 home jumps to ~$425,000 by 2034 (~$5,355 tax), erasing half the prior savings in five years. Uncertainty post-2029 undermines long-term planning.
  • SEAL SD: Permanent 2% cap keeps growth predictable. That $172,694 in 2034 stays low, with no looming spike, stabilizing budgets for homeowners, farmers, and businesses.

Edge: SEAL SD. Permanence beats SB 216’s temporary pause, offering consistent relief statewide.

4. Revenue Sustainability

  • SB 216: Impacts ~44% of the $1.4B annual property tax revenue (2024 estimate). A 3% cap vs. 9% growth shaves ~$50–70M/year off potential collections by 2029, manageable with levy hikes (e.g., 0.05 points adds ~$25M). Post-2029, revenue rebounds if caps lapse. Schools (56% of taxes) and counties adjust via opt-outs or cuts.
  • SEAL SD: Cuts taxable value by ~40% initially (~$100B drop), slashing ~$500–600M/year from local revenue. A $300M surplus covers half one year, but sustaining this requires sales tax hikes (e.g., reversing the 4.2% rate to 4.5% yields ~$104M/year) or state aid—risky if surpluses fade (e.g., post-2025 downturn).

Edge: SB 216. Less revenue shock makes it more viable long-term, though SEAL SD’s plan could work with robust state funding.

5. Statewide Implications

  • SB 216: Helps urban homeowners (Sioux Falls, Rapid City) most, where values spiked (e.g., Lincoln County’s $3,102 median tax). Rural areas with slower growth (e.g., Ziebach County) see less benefit. Commercial hubs and ag regions like Brookings face uncapped pressure, potentially raising costs of living and farming.
  • SEAL SD: Uniform relief aids all—urban homes drop from ~$2,600 to ~$1,850 in 2025, rural ag land (e.g., $1,000–$2,000 taxes) sees similar cuts, and commercial properties stabilize. High-growth counties (Minnehaha, Pennington) gain most from rollbacks, but all benefit long-term.

Edge: SEAL SD. Broader relief suits South Dakota’s diverse tax base—urban, rural, and commercial—more holistically.

Conclusion: Statewide Long-Term Winner

The SEAL SD plan offers superior long-term relief statewide. Its 2020 rollback delivers an immediate ~30–40% tax cut (~$500–$1,000/household in 2025), and the 2% cap keeps taxes lower than SB 216’s 3% by 2034 (e.g., ~$2,176 vs. $3,386 on a $200,000 home). Universal scope prevents burden shifts, and permanence ensures stability—critical for South Dakota’s 400,000 households, 30,000 farms, and growing commercial sector. By 2034, SEAL SD could save taxpayers ~$1–2B more than SB 216 cumulatively.

However, SB 216 is safer for local budgets, risking only ~$50M/year vs. SEAL SD’s ~$500M hit. SEAL SD’s reliance on surpluses and sales tax tweaks is a gamble—feasible now with $300M, but shaky if revenues tighten (e.g., post-2025). SB 216’s narrower focus and five-year limit make it less ambitious but more sustainable without major state intervention.

Verdict: SEAL SD wins long-term if funding holds, cutting taxes deeper and wider (e.g., ~$1,200/household more by 2034). SB 216 is a pragmatic stopgap, but its temporary, limited scope falls short of statewide needs. What do you think about balancing relief vs. revenue risks? That’s the crux here.