Janklow proposes final property tax reduction; ‘We’re putting taxpayers first again,’ he says

Janklow proposes final property tax reduction; 'We're putting taxpayers first again,' he says Gov. Bill Janklow announced Tuesday that state government has held down spending and saved enough money that it can afford to cut local property taxes by $20 million more next year.

The saving will pay for the final installment of Janklow's $122 million program to cut property taxes by 30 percent for homeowners, farmers and ranchers.

"We're putting taxpayers first again," Janklow said. "We're doing what most South Dakotans expect from their elected officials: holding down the growth of government and passing the savings back to taxpayers."

The additional tax relief requires approval by the South Dakota Legislature in its 2000 session. It would be the third major reduction in property taxes in six years.

Approximately $68 million of the money for property tax relief will have come from the Janklow administration's refusal to spend more than necessary in state government, including budget cuts of approximately 1,000 full-time equivalent positions (FTEs) in 1995-96 and a continued emphasis on budget efficiency.

Janklow promised during his 1994 election campaign to reduce property taxes for owner-occupied homes and agricultural property by 30 percent from their levels at that time.

At his urging the state Legislature approved the first 20 percent reduction in 1995 and found enough money for 25 percent in 1998.

The current 25 percent reduction costs state government $102 million annually. Reaching 30 percent requires an additional $20.4 million for a total of $122.4 million per year that the Legislature is paying instead of local property owners.

State law requires that any budget surplus be transferred into the state's budget reserve fund until the reserve reaches a level equal to 5 percent of the preceding budget. After the reserve fund hits the 5 percent level, state law further requires that any additional surplus remaining be transferred into the property tax reduction fund.

The state's budget reserve now has a balance of $36,550,922 and the property tax reduction fund has a balance of $43,692,779. That means state government has saved enough in the property tax reduction fund to pay for the final step in reaching 30 percent and also has money in reserve in case of economic downturn.

Janklow said South Dakota state government ended fiscal year 1999 on June 30 by transferring $1,398,957 to the budget reserve, and $16,919769 to the property tax reduction fund as required by law.

In the budget year that ended June 30, state government's general fund revenue collections totaled $751,133,373. That was $15,736,864 more than estimated during the 1999 legislative session.

Sales tax collections grew $17.3 million over prior-year levels and came in $1.5 million over the budget estimate. Other revenue sources which exceeded budget estimates were bank franchise tax (by $12.4 million, largely due to one-time collections); licenses, permits, and fees (by $1.7 million); alcohol beverage tax (by $0.5 million); and inheritance tax (by $0.4 million).

Revenue sources that fell short of budget estimates were insurance company tax (by -$0.9 million); contractor's excise tax (by -$0.1 million); and cigarette tax (by -$0.5 million).

At a glance: How did they raise the $122.4 million?


* Approximately $68 million in state budget cuts, savings and natural growth in state government revenue;


* Approximately $9.2 million from closing sales-tax exemptions and loopholes;


* Approximately $6.8 million from tobacco tax increases;


* Approximately $22.1 million from raising state's share of video lottery income; and


* Approximately $16.4 million from shifting personal-property-tax replacement funds directly to tax relief instead of continuing to send it to county governments.

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