An Act to reduce maximum values for certain property taxes levied on owner-occupied single-family dwellings, and to increase the rates for certain gross receipts taxes and use taxes repeal certain sales tax exemptions.

Be it enacted by the Legislature of the State of South Dakota:

Section 1. It is the intention of the Legislature that the proceeds from the elimination of tax exemptions under section 3 of this Act, be used to supplant all unrealized property tax revenue resulting from the reduction of the mill levy applied to owner-occupied single-family dwellings under section 2 of this Act, for school district general funds.

It is the intention of the Legislature that the reduction of the mill levy under section 2 of this Act for owner-occupied single-family dwellings does not affect the mill levies for the other classifications of real property, and does not adversely affect the total amount of moneys available to school districts through the school district funding formula for school district general funds.

Section 2. That § 10-12-42 be AMENDED:

10-12-42. For taxes payable in 2025 2026, and each year thereafter, the levy for the general fund of a school district is as follows:

(1) The maximum tax mill levy is five dollars and fifty-four and four-tenths cents per thousand dollars of taxable valuation, subject to the limitations on agricultural property as provided in subdivision (2) of this section and owner-occupied property as provided in subdivision (3) of this section;

(2) The maximum tax mill levy on agricultural property for the school district is one dollar and nineteen and seven-tenths cents per thousand dollars of taxable valuation. If the district's mill levies are less than the maximum levies as stated in this section, the levies must maintain the same proportion to each other as represented in the mathematical relationship at the maximum mill levies; and

(3) The maximum tax mill levy for an owner-occupied single-family dwelling pursuant to § 10-13-40 for the school district is two dollars and sixty-seven and nine-tenths cents per thousand dollars of taxable valuation.

If the a district's levies are less than the maximum levies as stated in this section, the levies must maintain the same proportion to each other as represented in the mathematical relationship at of the maximum mill levies.

All levies in this section must be imposed on valuations where the median level of assessment represents eighty-five percent of market value as determined by the Department of Revenue. These valuations must be used for all school funding purposes. If the district has imposed an excess levy pursuant to § 10-12-43, the levies must maintain the same proportion to each other as represented in the mathematical relationship at the maximum levies in this section. The school district may elect to tax at less than the maximum amounts set forth in this section.

Section 3. That § 10-45-12.1 be AMENDED:

10-45-12.1. The following services enumerated in the Standard Industrial Classification Manual, 1987, as prepared by the Statistical Policy Division of the Office of Management and Budget, Office of the President are exempt from the provisions of this chapter: health

(1) Health services (major group 80); educational

(2) Educational services (major group 82) except schools and educational services not elsewhere classified (industry no. 8299); social

(3) Social services (major group 83); agricultural

(4) Agricultural services (major group 07) except veterinarian services (group no. 074), and animal specialty services, except veterinary (industry no. 0752); forestry

(5) Forestry services (group no. 085); radio and television broadcasting (group no. 483); railroad

(6) Railroad transportation (major group 40); local

(7) Local and suburban passenger transportation (group no. 411) except limousine services; school

(8) School buses (group no. 415); trucking

(9) Trucking and courier services, except air (group no. 421) except and collection and disposal of solid waste; farm

(10) Farm product warehousing and storage (industry no. 4221); establishments

(11) Establishments primarily engaged in transportation on rivers and canals (group no. 444); establishments

(12) Establishments primarily engaged in air transportation, certified carriers (group no. 451); establishments

(13) Establishments primarily engaged in air transportation, noncertified carriers (group no. 452) except chartered flights (industry no. 4522) and airplane, helicopter, balloon, dirigible, and blimp rides for amusement or sightseeing; pipe lines

(14) Pipelines, except natural gas (major group 46); arrangement

(15) Arrangement of passenger transportation (group no. 472); arrangement

(16) Arrangement of transportation of freight and cargo (group no. 473); rental

(17) Rental of railroad cars (group no. 474); water

(18) Water supply (industry no. 4941); sewerage

(19) Sewerage systems (industry no. 4952); security

(20) Security brokers, dealers and flotation companies (group no. 621); commodity

(21) Commodity contracts brokers and dealers (group no. 622); credit

(22) Credit counseling services provided by individual and family social services (industry no. 8322); construction

(23) Construction services (division C) except industry no. 1752 and locksmiths and locksmith shops; consumer

(24) Consumer credit reporting agencies, mercantile reporting agencies, and adjustment and collection agencies (group no. 732), if the debt was incurred out‑of‑state and the client does not reside within the state. The following are also specifically exempt from the provisions of this chapter: financial

(25) Financial services of institutions subject to tax under chapter 10-43 including loan origination fees, late payment charges, nonsufficient fund check charges, stop payment charges, safe deposit box rent, exchange charges, commission on travelers checks, charges for administration of trusts, interest charges, and points charged on loans; commissions

(26) Commissions earned or service fees paid by an insurance company to an agent or representative for the sale of a policy; services

(27) Services of brokers and agents licensed under Title 47; the

(28) The sale of trading stamps; rentals

(29) Rentals of motor vehicles as defined by § 32-5-1 leased under a single contract for more than twenty‑eight days; advertising services; services

(30) Services provided by any corporation to another corporation which is centrally assessed having identical ownership and services provided by any corporation to a wholly owned subsidiary which is centrally assessed; continuing

(31) Continuing education programs; tutoring

(32) Tutoring; vocational

(33) Vocational counseling, except rehabilitation counseling; and motion

(34) Motion picture rentals to a commercially operated theater primarily engaged in the exhibition of motion pictures.

Section 4. That § 13-13-71 be AMENDED:

13-13-71. If local effort increases on a statewide aggregate basis by a greater percentage than local need on a statewide aggregate basis from any one year to the next, for the following year each of the mill levies specified in subdivision 13-13-10.1(13) shall § 10-12-42 must be reduced proportionally so that the percentage increase in local effort on a statewide aggregate basis equals the percentage increase in need on a statewide aggregate basis.

Section 5. That § 13-13-72 be AMENDED:

13-13-72. It is the policy of the Legislature that In 2026 and each year thereafter, the appropriation for state aid to education must increase on an annual basis by the percentage increase in local need on an aggregate statewide basis so that the relative proportion of local need paid by local effort and state aid shall remain remains constant. For school fiscal years 2017 to 2022, inclusive, the proportion of local need paid by local effort and state aid shall be adjusted annually to maintain the proportion between state aid and local property taxes and to reflect adjustments in local effort due to the implementation of the other revenue base amount as defined in § 13-13-10.1.

Section 6. That § 13-13-72.1 be AMENDED:

13-13-72.1. Any adjustments In 2026 and each year thereafter, any adjustment in the maximum mill levies specified in § 10-12-42 made pursuant to §§ 13-13-71 and 13-13-72 shall be based on maintaining must maintain the relationship between statewide local effort as a percentage of statewide local need in the fiscal year succeeding the fiscal year in which the adjustment is made. For school fiscal years 2017 to 2022, inclusive, the proportion of local need paid by local effort and state aid shall be adjusted annually to reflect adjustments in local effort due to the implementation of the other revenue base amount as defined in § 13-13-10.1. However, if If the maximum mill levies specified in § 10-12-42 are not adjusted to maintain this relationship, the target teacher salary, as defined in § 13-13-10.1 shall be, is reduced to maintain the relationship between statewide local effort as a percentage of statewide local need.