The creation of a leased residential property levy has again appeared in the South Dakota legislature’s chambers.
Members of the Senate Taxation committee narrowly passed Senate Bill 100, which creates the new classification and would set the levy at $9.10/$1,000 of valuation. A bill similar in nature has been approved by the House and defeated in the Senate in the previous two sessions.
“(SB 100) does not raise taxes. It does not lower taxes,” Sen. Deb Peters, the bill’s prime sponsor, said.
The levy set by the bill would be at the same level as the commercial property levy, which is where property that could be classified as leased residential currently is housed.
“We’re not commercial, we’re residential,” Dean Krogman, lobbyist for the S.D. Multi-Housing Association said.
Proponents of the bill also contended the change in classification would allow interested parties to track the financial effects on renters, owners and school districts, which would receive a portion of the revenue generated by the property tax for their general funds in accordance with the state funding formula.
Michael Houdyshell, testifying against the bill on behalf of the state, said the Department of Revenue has put together financial data on what the removal of leased residential property from the commercial would look like. He noted there is slightly more than $5 billion of qualifying property, which makes up approximately 30 percent of the commercial levy.
“Providing relief to those properties is going to cost something,” Houdyshell said, adding that there’s no guarantee the potential cost saving would be based on to tenants of leased residential properties.
“We deal with tax shifts everyday, with every bill,” Sen. Peters said in response to queries about a potential tax shift being created by establishment of a new classification.
“It’s serious enough that all 35 Senators should have at (reviewing SB 100),” Sen. Jason Frerichs said.
SB 100 now heads to the Senate floor for review.