Some doubt tax reform will come in 2026

Over the course of five months, the Comprehensive Property Tax Task Force met eight times across the state. The panel, which consists of 16 voting members and two non-voting members, heard from experts, officials and constituents about the impacts rising property taxes have on property owners across South Dakota. 

In its final meeting on Oct. 22, the task force recommended 19 proposals for property tax reform. There is also a ballot question that’s collecting signatures for voters to consider in the 2026 general election that seeks to replace property taxes with increased sales taxes. 

The number of proposals coming into the upcoming legislative session has some wondering if property tax reform will end up again in gridlock as it did in the previous session.

Rising delinquency rates

Bon Homme County Commissioner Duane Bachmann provided testimony during the task force’s May 30 meeting. He said that in the 10 years he’s served on the commission, the county evicted three families from their homes because they were delinquent on their property tax payments. 

“That’s something I didn’t really sign up for when I got on the commission, and it’s something we shouldn’t have to do,” Bachmann said. 

The increases in property taxes in the county are especially hard on retired people who have fixed incomes, Bachmann said in an interview. Every year, the treasurer produces a list of people who are behind on their taxes. 

“It just seems in the last probably three years, I've seen more people behind on their property tax than prior to that,” Bachmann said. 

At the May task force hearing, Bachmann proposed gradually replacing all property taxes with sales taxes. 

“We’re going to be back here every so many years talking about the high property taxes. And the only way we can get rid of them is to replace them with something else,” Bachmann told the panel.

Custer County bidding war

The problem is also evident across the state in the Black Hills.

Lea Anne McWhorter lives in Custer County, where she’s the chair of the Custer County Republican Central Committee. An influx of residents in 2020, who were coming from other states and buying up homes with cash, drove up home prices in the area.

Hank Whitney, another resident of Custer County, said the elderly are the ones who most struggle with the problem. 

“There are a lot of people in this area that it is bothering. People who were on fixed incomes. People with no nest eggs. That’s a really big issue,” Whitney said. 

There are also young people who grow up in Custer County but can’t afford to stay, McWhorter said. If they can afford a home, they pay for their mortgages with tight budgets that can’t take property tax increases.

The problem is statewide, and if something isn’t done, it’s only going to get worse, she said. 

“Everybody is going to feel it at some point,” McWhorter said. 

More than a dozen approaches

State Sen. Chris Karr, a Republican from Sioux Falls who chaired the task force, told News Watch that people shouldn’t get discouraged if multiple bills put forth approaches to addressing the problem. 

“Property tax relief, the way we fund property taxes, or the way we fund schools and local government through property taxes, is so multifaceted that one bill is not going to solve it. It takes a comprehensive approach,” Karr said. 

Sen. Foster, of Pine Ridge, said she’s not discouraged by the number of proposals because it shows there’s a lot of interest from legislators in solving the problem. 

“The political will is there more than it’s ever been before, and the need is also there," she said. "It’s not going to be cut and dry. So I’m optimistic, but I’m also aware of the challenges that we’re going to be facing.” 

She said one of those challenges is that the state’s dire funding outlook in the coming year might give lawmakers fewer options. 

The 2026 legislative session starts at noon on Tuesday, Jan. 13, with Gov. Rhoden’s “State of the State” address. March 9 is the last day for a bill or joint resolution to pass both houses.

This story was produced by South Dakota News Watch, an independent, nonprofit organization. Read more stories and donate at sdnewswatch.org and sign up for an email to get stories when they're published. Contact Kevin Killough at kevin.killough@sdnewswatch.org.