South Dakota Gov. Larry Rhoden delivers his annual budget address to lawmakers at the Capitol in Pierre on Dec. 2, 2025. (Photo by Makenzie Huber/South Dakota Searchlight)

South Dakota Gov. Larry Rhoden, who has his own idea to reduce property taxes, does not sound impressed with 19 recommendations from a legislative task force.

“I’ve realized that there’s not much I’ve seen that I could support,” Rhoden told South Dakota Searchlight during a visit to Rapid City last week.

The governor’s own proposal, which he announced in March, would authorize an optional sales tax for counties. The revenue would be used to reduce property taxes for homeowners. 

“And I’ll say this, too: I’m not done yet,” Rhoden added. “We’re still looking at some other ideas.”

Lower spending, higher sales tax, revenue shifts: A closer look at 19 ways to reduce property taxes

Proposals from the governor and lawmakers will be debated during the annual legislative session at the Capitol in Pierre, which begins Jan. 13 and continues until March.

The legislative task force compiled its 19 recommendations throughout the summer. They include tweaks to existing practices, like creating an online system for property tax relief applications from elderly and disabled people, instead of requiring paper forms. Other recommendations would require major policy changes, such as cutting state spending and using the savings to provide property tax relief, capturing proceeds from a higher state sales tax rate to fund property tax reductions, and taking money from the state’s reserve accounts and a housing infrastructure fund to provide property tax credits for homeowners.

The speaker of the state House of Representatives, Jon Hansen, R-Dell Rapids, was the vice chairman of the Legislature’s Comprehensive Property Tax Task Force. He’s also one of the candidates challenging Rhoden for the Republican nomination for governor next year.

When the task force announced its 19 recommendations in October, Hansen framed high property taxes as a government spending problem. He authored two of the recommendations, including a request for the governor’s cooperation in cutting 5% of the spending from the state’s general fund.

“Real tax relief begins with right-sizing government,” Hansen said in a news release at the time.

Rhoden challenged that framing last week during his annual budget address to the Legislature, saying there’s little room for cuts in his lean budget proposal.

“I share the desire to cut property taxes,” Rhoden said in the speech. “But slashing health care, education and public safety is not the way to do it.”

Pressure to address rising taxes is coming from South Dakota homeowners, whose property tax payments increased nearly 40% during the past four years.

State government does not receive any property tax revenue. It relies mostly on sales taxes.

Property tax revenue goes primarily to schools and counties, with lesser amounts to cities and other local taxing entities. Cities can also impose sales taxes.

Rhoden’s proposal would give counties the option to impose a half-percent sales tax. Revenue would be used to reduce the county portion of property taxes on owner-occupied homes. Any excess revenue would be used to reduce commercial and agricultural property taxes.

Because sales taxes apply to anyone spending money in the state, Rhoden has said his plan would “shift a portion of the county tax burden to out-of-state visitors.”

County commissioners could impose the sales tax, and citizens could gather petition signatures to send the decision to local voters. 

It’s the second property tax relief idea from Rhoden since he was elevated from lieutenant governor in January, after Gov. Kristi Noem’s departure to run the federal Department of Homeland Security.

Lawmakers approved the first idea in March, and it took effect on July 1. The multifaceted law is intended to slow property tax increases. It places tighter limits on the growth of property assessments and local government budgets for five years, exempts some home improvements from affecting assessments, and makes more elderly and disabled people eligible for property tax assessment freezes by raising limits on their income and home values.

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The 19 recommendations from the Legislature’s Comprehensive Property Tax Task Force.