SIOUX FALLS, S.D. (KELO) — A new property tax bill could change how some school districts are able to handle capital projects and even curriculum, two superintendents in eastern South Dakota said.
The law is effective July 1 and it caps annual increases to no more than 3% from property taxes on the amount used for capital outlay budgets, according to Senate Bill 216. The law also caps total growth in assessed values of owner-occupied homes at 3% in counties.
Dr. Jennifer Nebelsick Lowery, the superintendent at Tea and soon-to-be superintendent at Harrisburg, said the new law will create challenges. Both Tea and Harrisburg are among the fast-growing districts in Lincoln County, it is one of the fastest-growing counties in the state and has been one of the fastest-growing in the U.S.
Capitol growth in Tea has generally matched growth in the student population by plus or minus 3% annually, Nebelsick Lowery said.
“To now say that the funding will be held at 3%…,” Nebelsick-Lowery said. “We are talking about rooftops and facilities.” And also curriculum.
The Tea district established a new reading curriculum in fiscal year 2020. The cost had been around $359,000 but the cost has increased by 122% since then.
“Because of inflation and the increase in the number of students, it’s just under $800,000,” Nebelsick Lowery said.
To the north, in northern Minnehaha County, the Baltic School District, like Tea, has experienced growth. Baltic just built a new high school.
Baltic superintendent Dr. Eric Bass said it’s difficult to determine how the 3% cap will affect the school. “If capital money is capped at 3% and we grow by 7% or 8%…,” Bass said, then it could be difficult to fund projects.
The district built the new high school based on about 5% annual growth, he said.
While areas south of Sioux Falls have had nearly explosive growth over the past decade, Baltic could be just at the start. As development continues in Foundation Park in northern Sioux Falls, it will likely trigger housing and other development in cities like Baltic and Crooks. An Amazon facility has about 2,300 jobs, while a CJ Schwans project will have reported roughly 600 jobs.
Officials in Baltic are encouraging housing expansion. In the last year, seven houses have been built in the city of about 1,300, Bass said.
Bass also said expansion South Dakota Highway 115 north of Sioux Falls toward Dell Rapids is a possibility. The South Dakota Department of Transportation is doing a corridor study on the highway.
“If they (state) do that it will make access to Sioux Falls easier,” he said.
The district’s new high school opened in the fall of 2024. Bass said the new high school and overall K-12 is designed to hold 900 students.
“It depends on how fast we grow,” Bass said. “If we get a few kids a year but if all of a sudden a 100 new kids show up, it’s going to be interesting.”
Other districts, such as Tri-Valley just to the north of Sioux Falls, will likely be affected by development in the Sioux Falls industrial park.
The new is set to sunset after 2031 taxes but “what happens at the end of it?” Bass asked.
For now, “it’s really too early to tell…,” what the impact will be, Bass said.
Right now, the Tea School District is considering capitol expenses. “We are looking at how to creatively finance projects,” Nebelsick Lowery said.
Both superintendents know that property owners have asked lawmakers for property tax relief.
“Every taxpayer sees taxes through different lenses,” Nebelsick Lowery said. “And I have deep respect for the complexity of each of the different lenses,”.
The district will continue to work the community which has well-supported the district in the past, she said.
