Schools and Local Services

April 8, 2025
Seal SD Liberty

Response: How Our Revenue Replacement Strategy Covers Schools and Local Services

I appreciate this concern — it’s an important and fair question.

Let’s break this down step by step.

1. Core Goal: Fully Replace Property Tax Revenue Without Raising Burden on Families

Our plan is designed to eliminate property taxes permanently while maintaining — and protecting — critical services like:

  • Local government operations
  • County services
  • Public schools

We do this with two tools:

  1. Gross Receipts Tax (GRT)
  2. Spending reductions and government efficiency

2. Revenue Math: Does the GRT Cover School and Local Government Spending?

Let’s look at the numbers.

  • Current property tax revenue in SD: ~$1.6 billion annually
  • Out of that, schools rely on: ~$900 million
  • Counties & local services rely on: ~$500 million

Now, let’s compare:

  • 2.5% GRT estimated annual revenue: ~$1.625 billion

✅ Conclusion:
➡️ The 2.5% GRT fully covers existing property tax revenue, including full school and local service funding levels.

3. What About the State Budget Overall?

  • South Dakota’s total state spending is ~$7.29 billion.
  • GRT isn’t meant to replace all spending — it’s targeted at property tax replacement only.
  • Existing sales tax and other revenues stay in place to fund the general state budget.

✅ Conclusion:
➡️ We’re not replacing sales tax or other funding streams.
➡️ We’re only removing property tax, and GRT directly replaces it dollar-for-dollar.

4. Local Government & Schools: Protected

To avoid any risk to schools and local services, we’re including legal guarantees in our plan:

  • GRT revenue is legally earmarked for services previously funded by property tax.
  • 60% of GRT directly funds schools, ensuring no loss of education funding.
  • 30% of GRT funds local government services like roads, law enforcement, fire protection, and county programs.
  • 10% funds infrastructure and essential public services.

Additionally, the South Dakota Department of Government Efficiency (SD-DOGE) monitors this to enforce transparency and prevent misuse of funds.

✅ Conclusion:
➡️ Schools and local services are not only protected — they are legally prioritized.

5. Efficiency Gains: A Bonus, Not a Replacement

Our government efficiency plan (through SD-DOGE) is about:

  • Eliminating waste (county assessors, bureaucratic overlap).
  • Streamlining services.
  • Cutting administrative fat from the system.

These savings (estimated at ~$350 million annually) go back to taxpayers and into essential services — they are not relied upon to “cover the gap.”

✅ Conclusion:
➡️ Efficiency savings make the system stronger, but they are not the backbone of funding. GRT is.

6. No Hidden Cuts, No Backdoor Taxes

Let’s be clear:

  • No new taxes on families.
  • No cuts to classrooms or county services.
  • No shifting of costs to towns or counties.
  • No risk of homeowners losing services.

We are designing this to be fully self-contained and fiscally stable.

Bottom Line:

Will schools and local services be cut?
➡️ No. We’re fully funding them, legally protecting them, and auditing spending to ensure it stays that way.

Are we relying on cuts alone?
➡️ No. GRT covers the revenue. Spending cuts are an added efficiency measure — not a replacement for core funding.

Does this reduce risk?
➡️ Yes. Homeowners are protected from property tax foreclosure, schools are legally funded, and local governments stay whole.