House Taxation Minutes 02/15/2007 7:30 AM

82^nd Legislative Session _ 2007

Committee: House Taxation

Thursday, February 15, 2007

                                            P - Present
                                            E - Excused
                                            A - Absent

Roll Call
P    Bradford
P    Faehn
P    Feinstein
P    Juhnke
P    Lust
P    Noem
P    Novstrup (Al)
P    Olson (Ryan), Vice-Chair
P    Peters
P    Thompson
P    Turbiville
P    Van Etten
P    Weems
P    Wick
P    Dykstra, Chair

OTHERS PRESENT: See Original Minutes

The meeting was called to order by Chair Joel Dykstra

MOTION:     TO APPROVE THE MINUTES OF FEBRUARY 6, 2007

Moved by:    Turbiville
Second by:    Van Etten
Action:    Prevailed by voice vote.

         SB 173: revise certain provisions concerning the assessment of real property, to revise certain tax levy limitations for schools, to revise certain provisions regarding property tax levies for school districts, and to repeal the nonagricultural acreage classification.

Presented by:    Representative Larry Rhoden
Proponents:    Senator Dave Knudson
        Senator Jim Lintz
        Michael Kenyon, Department of Revenue and Regulation
        David Owen, SD Chamber of Commerce & Industry
        Michael Held, SD Farm Bureau
        Matt McLarty, SD Farmers Union
        Rick Vallery, SD Wheat Inc.
        Kirk Chaffee, Self
        Brenda Forman, SD Cattlemen's Association
        Senator Kenneth McNenny
Opponents:    Mary Worlie, Self
        Representative Al Novstrup
        Representative Tom Hackl
        Renee Buch, Self
        Kim Markley, Self
        Senator Nancy Turbak

The Chair deferred SB 173 until later date.

         HB 1274: revise certain provisions concerning the use of certain real property sales to value other real property.

Presented by:    Representative Hal Wick

MOTION:     DEFER HB 1274 TO THE 41^ST LEGISLATIVE DAY

Moved by:    Van Etten
Second by:    Feinstein
Action:    Prevailed by roll call vote.(14-0-1-0)

Voting Yes:    Bradford, Faehn, Feinstein, Juhnke, Lust, Noem, Novstrup (Al), Olson (Ryan), Peters, Thompson, Turbiville, Van Etten, Wick, Dykstra

Excused:    Weems

         HB 1304: create additional classifications of real property and to revise certain provisions concerning the taxation of such property.

Presented by:    Representative Deb Peters

MOTION:     DEFER HB 1304 TO THE 41^ST LEGISLATIVE DAY

Moved by:    Turbiville
Second by:    Olson (Ryan)
Action:    Prevailed by roll call vote.(14-1-0-0)

Voting Yes:    Bradford, Faehn, Feinstein, Juhnke, Lust, Noem, Novstrup (Al), Olson (Ryan), Peters, Thompson, Turbiville, Van Etten, Weems, Dykstra

Voting No:    Wick

         HB 1308: revise certain provisions concerning the valuation of real property by allowing the director of equalization to use more sales during the assessment process and to revise certain provisions regarding taxes payable for the capital outlay fund of school districts.

Presented by:    Representative Al Novstrup
Proponents:    Mary Worlie, Self
        Russ Ronke, Self
        Renee Buch, Self
        Kim Markley, Self
        Representative Don Van Etten
Opponents:    Representative Larry Rhoden
        Michael Kenyon, Department of Revenue and Regulation
        Kirk Chaffee, Self
        Senator Jim Lintz
        Michael Held, SD Farm Bureau
        Rick Vallery, SD Wheat Inc.

MOTION:     AMEND HB 1308

On page 3 of the printed bill, delete lines 15 to 19 , inclusive, and insert:

"

Notwithstanding the provisions § 10-6-74 and § § 10-6-33.14 to 10-6-33.18, inclusive, for the taxes payable in 2009, 2010, 2011, 2012, and 2013, no property's valuation may increase more than fifteen percent per year. However, if the property was changed to another classification of property or any improvement or addition was made to the property, this section does not apply".

Moved by: Wick

Second by:    Feinstein
Action:    Prevailed by voice vote.

MOTION:     AMEND THE AMENDMENT

On page 5, after line 20 of the printed bill, insert:

"
Section 13. That § 13-37-16 be amended to read as follows:

13-37-16. For taxes payable in 1997, and each year thereafter, the school board shall levy no more than one dollar and forty cents per thousand dollars of taxable valuation, as a special levy in addition to all other levies authorized by law for the amount so determined to be necessary, and such levy shall be spread against all of the taxable property of the district. The proceeds derived from such levy shall constitute a school district special education fund of the district for the payment of costs for the special education of all children in need of special education or special education and related services who reside within the district pursuant to the provisions of §§ 13-37-8.2 to 13-37-8.10, inclusive. The levy in this section shall be based on valuations such that the median level of assessment represents 85% of market value as determined by the Department of Revenue and Regulation. The total amount of taxes that would be generated at the levy pursuant to this section shall be considered local effort. Money in the special education fund may be expended for the purchase or lease of any assistive technology that is directly related to special education and specified in a student's individualized education plan. This section does not apply to real property improvements.

For taxes payable in 2009, the total amount of revenue payable from the levy provided in this section may not increase more than the lesser of three percent or the index factor, as defined in § 10-13-38, over the maximum amount of revenue that could have been generated for the taxes payable in 2008. After applying the index factor, a school district may increase the revenue payable from taxes on real property above the limitations provided by this section by the percentage increase of value resulting from any improvements or change in use of real property, annexation, minor boundary changes, and any adjustments in taxation of real property separately classified and subject to statutory adjustments and reductions under chapters 10-4, 10-6, 10-6A, and 10-6B, except § 10-6-31.4, only if assessed the same as property of equal value.

Any school district created or reorganized after January 1, 2007, is exempt from the limitation provided by this section for a period of two years immediately following its creation.

For taxes payable in 2010, 2011, 2012, and 2013, the total amount of revenue payable from the levy provided in this section may not increase more than the lesser of three percent or the index factor, as defined in § 10-13-38, over the maximum amount of revenue that could have been

generated for the taxes payable in 2008 plus any unused index factor from the previous years. After applying the index factor, a school district may increase the revenue payable from taxes on real property above the limitations provided by this section by the percentage increase of value resulting from any improvements or change in use of real property, annexation, minor boundary changes, and any adjustments in taxation of real property separately classified and subject to statutory adjustments and reductions under chapters 10-4, 10-6, 10-6A, and 10-6B, except § 10-6-31.4, only if assessed the same as property of equal value.

For taxes payable in 2009, 2010, 2011, 2012, and 2013, the levy limitation of one dollar and forty cents per thousand dollars of taxable valuation does not apply to any school district.

Section 14. That § 13-37-35.1 be amended to read as follows:

13-37-35.1. Terms used in chapter 13-37 mean:

(1) "Level one disability," a mild disability;

(2) "Level two disability," a mental retardation or emotional disorder;

(3) "Level three disability," hearing impairment, deafness, visual impairment, deaf-blindness, orthopedic impairment, or traumatic brain injury;

(4) "Level four disability," autism;

(5) "Level five disability," multiple disabilities;

(5A) "Level six disability," prolonged assistance;

(6) "Index factor," is the annual percentage change in the consumer price index for urban wage earners and clerical workers as computed by the Bureau of Labor Statistics of the United States Department of Labor for the year before the year immediately preceding the year of adjustment or three percent, whichever is less;

(7) "Local effort," shall be calculated for taxes payable in ~~2006 and thereafter using a special education levy of one dollar and twenty cents per one thousand dollars of valuation~~ 2009, 2010, 2011, 2012, and 2013, as six-sevenths of the amount that could have been generated pursuant to § 13-37-16 ;

(8) "Allocation for a student with a level one disability ," for the school fiscal year beginning July 1, 2004, is $ 3,533.13. For each school year thereafter, the allocation for a student with a level one disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

(9) "Allocation for a student with a level two disability ," for the school fiscal year beginning July 1, 2004, is $ 8,277.21. For each school year thereafter, the allocation for a student with a level two disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

(10) "Allocation for a student with a level three disability ," for the school fiscal year beginning July 1, 2004, is $ 12, 580.73. For each school year thereafter, the allocation for a student with a level three disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

(11) "Allocation for a student with a level four disability ," for the school fiscal year beginning July 1, 2004, is $ 12, 001.80. For each school year thereafter, the allocation for a student with a level four disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

(12) "Allocation for a student with a level five disability ," for the school fiscal year beginning July 1, 2004, is $ 15, 882.21. For each school year thereafter, the allocation for a student with a level five disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

(12A) "Allocation for a student with a level six disability ," for the school fiscal year beginning July 2004, is $8,122.23. For each school year thereafter, the allocation for a student with a level six disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

(13) "Child count," is the number of students in need of special education or special education and related services according to criteria set forth in rules promulgated pursuant to §§ 13- 37-1.1 and 13-37-46 submitted to the Department of Education in accordance with rules promulgated pursuant to § 13-37-1.1;

(14) "Average daily membership," the average number of kindergarten through twelfth grade pupils enrolled in all schools operated by the school district during the previous regular school year plus the average number of pupils for whom the district pays tuition;

(15) "Nonpublic school," a sectarian organization or entity which is accredited by the secretary of education for the purpose of instructing children of compulsory school age. This definition excludes any school that receives a majority of its revenues from public funds;

(16) "Nonpublic average daily membership," the average number of children under age sixteen who are approved for alternative instruction pursuant to § 13-27-2 during the previous school year plus:

(a) For nonpublic schools located within the boundaries of a public school district with an average daily membership of six hundred or more during the previous school year, the average number of kindergarten through twelfth grade pupils enrolled during the previous regular school year in all nonpublic schools located within the boundaries of the public school district;

(b) For nonpublic schools located within the boundaries of a public school district with an average daily membership of less than six hundred during the previous school year, the average number of resident kindergarten through twelfth grade pupils enrolled during the previous school year in all nonpublic schools located within the State of South Dakota;

(17) "Special education average daily membership," average daily membership plus nonpublic average daily membership;

(18) "Local need," an amount to be determined as follows:

(a) Multiply the special education average daily membership by 0.1013 and multiply the result by the allocation for a student with a level one disability;

(b) Multiply the number of students having a level two disability as reported on the child count for the previous school fiscal year by the allocation for a student with

a level two disability;

(c) Multiply the number of students having a level three disability as reported on the child count for the previous school fiscal year by the allocation for a student with a level three disability;

(d) Multiply the number of students having a level four disability as reported on the child count for the previous school fiscal year by the allocation for a student with a level four disability;

(e) Multiply the number of students having a level five disability as reported on the child count for the previous school fiscal year by the allocation for a student with a level five disability;

(f) Multiply the number of students having a level six disability as reported on the child count for the previous school fiscal year by the allocation for a student with a level six disability;

(g) Sum the results of (a) through (f);

(19) "Effort factor," ~~the school district's special education tax levy in dollars per thousand divided by $1.20. The maximum effort factor is~~ for taxes payable 2009, 2010, 2011, 2012, and 2013 shall be 1.0. ".

Moved by:    Peters
Second by:    Wick
Action:    Prevailed by voice vote.

MOTION:     DO PASS HB 1308 AS AMENDED

Moved by:    Wick
Second by:    Feinstein
Action:    Was not acted on.

MOTION:     SUBSTITUTE MOTION DEFER HB 1308 TO THE 41^ST LEGISLATIVE DAY

Moved by:    Olson (Ryan)
Second by:    Juhnke
Action:    Failed by roll call vote.(6-9-0-0)

Voting Yes:    Juhnke, Lust, Noem, Olson (Ryan), Turbiville, Dykstra

Voting No:    Bradford, Faehn, Feinstein, Novstrup (Al), Peters, Thompson, Van Etten, Weems, Wick

MOTION:     DO PASS HB 1308 AS AMENDED

Moved by:    Wick
Second by:    Feinstein
Action:    Prevailed by roll call vote.(11-4-0-0)

Voting Yes:    Bradford, Faehn, Feinstein, Lust, Novstrup (Al), Peters, Thompson, Turbiville, Van Etten, Weems, Wick

Voting No:    Juhnke, Noem, Olson (Ryan), Dykstra

MOTION:     TO AMEND TITLE OF HB 1308

On page 1, line 3 of the printed bill, after " for " insert "special education and".

Moved by:    Peters
Second by:    Weems
Action:    Prevailed by voice vote.

MOTION:     ADJOURN

Moved by:    Turbiville
Second by:    Juhnke
Action:    Prevailed by voice vote.

____________________________

Committee Secretary

Joel D. Dykstra, Chair