Senate Bill 191 fails on House floor

After unanimously running through the Senate, Senate Bill (SB) 191 introduced by District 30 Sen. Amber Hulse narrowly passed the House State Affairs Committee March 5 with a 7-6 vote before failing on the House floor March 10 with a 62-7 vote of opposition.
Originally, Hulse introduced SB 191 Feb. 3 as “An Act to limit annual valuation increases on owner-occupied single-family dwellings.”
For homeowners who owned their property before November 2020, SB 191 would have rolled back property valuations to 2020 levels with a three percent cap on annual valuation increases thereafter. For homeowners who purchased their property after November 2020, SB 191 would have set property valuations at the fair market value at the time of purchase with future annual valuations capped at three percent.
SB 191 was first read in the House Feb. 26 and was referred to the House State Affairs Committee for a hearing March 5. While in committee, two more amendments were made, starting with Amendment D.
“In committee, we had amended the bill to try to make an exception for a couple fire districts and EMS (Emergency Medical Services) districts in the Black Hills that are already taxing at the max mill levy, even with high assessment values. So in order to allow those few taxing districts to continue to increase their budgets 3 percent each year, even if the assessment values were to go down, we added an amendment. That amendment then would have required the bill to pass by a two-thirds vote on the floor. That came out over the weekend, and that’s essentially what was used to kill the bill, ultimately,” said Hulse.
Another challenge Hulse saw was SB 191 was competing against Gov. Larry Rhoden’s SB 216.
“The governor’s office had a bill, and his bill was going to make it through the legislature no matter what because that’s what always happens when the governor brings a bill. So that was also part of the problem is that we had dueling priorities. The governor’s office has many people from the executive branch as lobbyists that will support or kill legislation as the second floor sees fit. So that’s essentially what happened is the second floor did not like the bill,” said Hulse. “I’m not a House member, so it’s a little bit more difficult because I’m not a member of that body. I don’t know how to say this nicely, but the dogs were called out on my bill, and so it failed by a wide margin because they had the secretary of the Department of Revenue, the Department of Revenue, head of property taxes, the governor himself and several other lobbying groups all out on the floor lobbying to the House members against the bill.”
Hulse added that if SB 191 had made it through the House, Rhoden said he planned on vetoing it.
“He did not like the bill,” said Hulse.
In the end, Hulse said a lot of people were in favor of SB 191 because they understood there were two parts to the equation.
“On the one side of the equation, if you reduce the mill or you cut spending, which would reduce the mill, that’s great, but if you still have too high of an assessment value that’s inflated on the first half of the equation, you’re going to still pay more than you should be,” Hulse said. “So when you get that through to people where they understand how the property tax formulas work, they understood that it’s a multi-faceted problem that we’re dealing with and that just cutting spending or changing the school formula won’t solve the problem that essentially the equalization across the county, or even the state, isn’t being done correctly now because of the inflated real estate market that Covid brought. And people that understood that loved the bill because they understood what it meant to get things reset.”
In regards to the latest opposition, Hulse said the second somebody does not like a bill, they will say that it is unconstitutional.
“That was some of the arguments that were still floating around even though I had a tax organization constitutional law lawyer of 17 years write a brief about how the bill was in fact constitutional. And then there’s a lot of ag groups in Pierre. It’s probably the largest conglomerate of lobbyists from the ag world. And so there was concern that the bill was going to shift too much onto ag,” Hulse said.
In response to this, Hulse said that many people do not know that 5 percent of the overall property tax burden has shifted from agricultural to owner-occupied in the last five years.
“Ag for like 20 years has been paying around 25, 26, 27 percent of the overall property tax burden in the state. Well, last year, they were down to 20 percent of that share, and owner-occupied was up five percent. I think 44 percent of all the property tax burden is on owner-occupied now, and so there’s been a significant shift between ag and owner-occupied in the last five years.
“So I was a little frustrated with the arguments that, essentially, I was out to kill ag. I by no means have any ill will towards the ag community, but we just have to get things corrected and back to what the norm was for the last 20 years before COVID came,” said Hulse.
Hulse attempted to address this with Amendment F, but said, “Honestly, I didn’t really like that amendment, because there needs to be a little bit of a shift back to ag to get things equalized out again. But I added that in an attempt to try to preempt some of the ag arguments. But then adding that, then people said, ‘Oh, well, now it’s just going to be a shift within owner occupied.’ And then people were worried about first time home buyers.”
Overall, Hulse said the entire experience taught her that if someone doesn’t like a bill, “You’re kind of damned if you do and you’re dammed if you don’t, especially with property tax bills.”
You’re always kind of picking winners and losers, and that’s very, very difficult to do with such a comprehensive policy,” Hulse said. “You’re always going to upset someone, and so that's the difficulty with just property tax policy in general.”
In reflecting on the end results of SB 191, Hulse said she was pretty frustrated.
“There was 20 plus bills, I believe, between the House and Senate that were brought this legislative session, and the only one that made it through was the governor’s bill,” Hulse said. “So go figure. And that’s, I think, truly because it was the governor’s bill not because it was the best idea.
“I wish that the governor’s task force was truly more collaborative, where legislators were actually brought in, and we could pick the roses out of the thorns and put together a bouquet instead of essentially having a policy on the table that was already decided before the legislators ever walked in the door. There wasn’t that sense of taking everybody’s ideas or the good parts of all the different bills and putting it together in one kind of Frankenstein bill. That’s what I wish would have happened. I think that we would have seen a lot more relief to the people had we had that more collaborative task force.”
Instead, Hulse said, “It was a fight to essentially not make the governor angry and still try to push your bills through while the governor had a competing bill. And as an individual legislator, you never win that fight.”
During the process, Hulse said she kept asking to vote for SB 216 as well as a companion bill and said Rhoden was willing to sign a bill that fit well with SB 216.
“But that seems now, having gone through the experience, un-genuine because none of the bills were ever going to probably get signed by him given that there was such harsh lobbying on all of the other individual legislators’ bills, not just mine,” she said. “It’s just frustrating because you want the governor to get involved because you want to get legislators together on a task force to push something through. But when the legislators aren’t really included in deciding that policy, it’s frustrating. There’s three branches of the government, and the legislators are supposed to be the legislative branch, and the governor the executive branch are not supposed to be legislating. And so it’s been interesting to learn this process and see how we kind of blur those lines sometimes in Pierre.”
Additionally, Hulse said she challenged members of the House, asking, “Would you vote for the governor’s bill if an individual legislator’s name was on the top of it?” She said many members said, “No.”
“It does do some good things. It does expand the elderly freeze program. So for anybody who’s 65 and up, it makes the assessment value cap to $500,000. So I think for a lot of people in the Black Hills that are 65 and up, if your home is worth $500,000 or less, you may qualify for this program now, where you didn’t before so that's helpful.
“I do believe that they amended it yesterday after it failed initially. The House went up in caucus and then amended it so that everybody could get behind it. That had to do with the growth caps that are in the bill. I’m not really sure at this point what the amendments reportedly are supposed to do. And that’s one of the things that’s frustrating with the governor’s bill is the people don’t understand even what relief it will bring. And quite frankly, it’s because it’s not going to bring, I think, a massive amount of relief for many people,” said Hulse.
As for SB 191, Hulse said the idea is something that could still be brought back, especially as the legislature learns more about assessment issues.
“I’ve already been made aware of issues that certain counties are handling garages and outbuildings different than other counties. So when you talk about constitutionality, that’s an equal protection issue right there.
“The idea of 191 with adjusting assessment values and ensuring that people’s assessments are not necessarily frozen but are limited so that your assessment can’t grow an exponential amount year-over-year is not some crazy idea. So I could see something coming back that maybe doesn’t limit it in the same way that 191 did, but that ensures that people don’t see these crazy jumps year over year. The good thing about this year is a lot of people learned a lot more about property taxes than they did before they started,” said Hulse.
However, she added that any bill brought forward in the future would need to preempt the agricultural community, “because the ag lobbying against any property tax bill is very difficult to overcome.”
For more information about the outcome of SB 191, go to sdlegislature.gov/Session/Bill/25925.