PIERRE, S.D. – A House committee on Thursday sent a property tax bill to the 41st day, effectively killing it for the 2026 legislative session.

House Bill 1032 would have removed the three-year limit on how long counties and cities can bank unused CPI, also known in statute as unused index factor authority, when setting property tax levies.

Bill sponsor Rep. Travis Ismay, R-Vale, said the bill was intended to encourage local governments to lower budgets without permanently losing future flexibility.

“This will not solve every problem with property taxes, but this at least incentivizes counties to reduce their budgets and take some sort of pressure off of them to spend everything they collect,” Ismay said. (4:56–5:13)

Local government groups supported the bill, arguing current law creates a use-it-or-lose-it incentive. Eric Erickson with the South Dakota Association of County Commissioners told lawmakers local officials need flexibility for future expenses.

Opponents warned the proposal could allow large tax increases years down the road. Wendy Semmler with the Department of Revenue testified the bill could create long-term risks for property owners.

“Allowing that indefinite CPI carry forward means a county or city could accumulate years, even decades, of unused taxing authority,” Semmler said. (13:05–13:37)

After rejecting a do-pass motion on a 10-to-3 vote, the committee voted to send House Bill 1032 to the 41st legislative day, where it will not advance further this session.