2016 Legislative Limitations Presented by Wendy Semmler Department of Revenue Property Tax Division

2016 Legislative Session General Levy AG – OO – OTH – Special Ed 1.505

Legislative Session - Utilities For new wind farms that begin to produce power after , the school portion of the wind energy tax will not be counted as local effort for the first 5 years. In year 6, 20% will be counted as local effort. In year 7, 40% will be counted as local effort. In year 8, 60% will be counted as local effort. In year 9, 80% will be counted as local effort. In year 10, all of it will be counted as local effort. For questions or more information, contact Todd Bailey at or

Legislative Session - Utilities There were no change to , distribution from the wind energy tax fund: 50% will continue to go to the schools 35% will continue to go to the county 15% will continue to go to the township(s) For questions or more information, contact Todd Bailey at or

Pension Fund Pension fund has been rolled into the General Levy Fund No longer a separate request

Capital Outlay Limitation Change to South Dakota Codified Law The total amount of revenue payable from the levy provided in this section may not increase annually by more than the lesser of three percent or the index factor, as defined in § , over the maximum amount of revenue that could have been generated from the taxes payable in After applying the index factor, a school district may increase the revenue payable from taxes on real property above the limitations provided by this section by the percentage increase of value resulting from any improvements or change in use of real property, annexation, minor boundary changes, and any adjustments in taxation of real property separately classified and subject to statutory adjustments and reductions under chapters 10-4, 10-6, 10-6A, and 10-6B, except § , only if assessed the same as property of equal value. A school district may increase the revenue it receives from taxes on real property above the limit provided by this section for taxes levied to pay the principal, interest, and redemption charges on any bonds issued after January 1, 2009, which are subject to referendum, scheduled payment increases on bonds and for a levy directed by the order of a court for the purpose of paying a judgment against such school district. Any school district created or reorganized after January 1, 2016, is exempt from the limitation provided by this section for a period of two years immediately following its creation.

What does this mean? The maximum you can get will be based upon your Pay 2016 value, increased by growth percentage and CPI percentage Growth = new construction in your school district CPI = the index factor set according to SDCL or 3%, whichever is less Reappraisal increases/decreases have no effect on this calculation

Pay 2016 Maximum/Base *see handout for full list of all school districts

Calculating Growth Find the total valuation for the ENTIRE school district (all counties, all land classes) You will need Previous year’s total value Increase of value due to growth Final value for current year

Calculating Growth Increase Due to Growth / Last Year’s Value aka Column 3 / Column 1 510,054 / 25,329,464 =.02 or 2%

How will this affect my district? Scenario 1 – School District A has always taken max CO. They plan to continue to do so. This year, they will be able to ask for $6,294,877 increased by Pay 17 growth + cpi, which is $6,521,493. The next year, they will be able to ask for $6,521,493 increased by Pay 18 growth + cpi.

How will this affect my district? Scenario 2 – School District B is currently taking less than max CO. They know they do not need to take max this year, but they have plans to build a new school and will need to take all they can get in Pay To determine what they can get at that time, they will take their max in Pay 17 ($3,080,794) and increase it by Pay 18 growth + cpi.

How will this affect my district? Scenario 3 – School District C has never taken max, but they are very nervous about this new limitation and they are just going to take as much as they can get for Pay 17 ($996, 838). In Pay 18, they realize they over reacted and they don’t need that much and they lower their request to $800,000. The next year their financial situation has changed, and they need more money. They will be able to go to the maximum amount allowed in Pay 18 ($996,838 increased by growth + cpi), and increase it by Pay 2019 growth + cpi.

Important Considerations A school district does not get penalized for not taking their maximum CO. Keep in mind!! No matter which scenario you may fall under, the CO fund will never be able to get more than $3.00 / thous Capital Outlay request must be made in in dollar amount!

Submitting Tax Request TAX DOLLAR REQUESTTAX LEVY REQUEST General Fund $___________________ ORGeneral Fund $____________ /per $1,000 of ag valuation Opt Out $___________________ Special Ed Fund $___________________ ORSpecial Ed Fund $____________/per $1,000 of total valuation Capital Outlay$ _________________ Bond Redemption$ ___________________

QUESTIONS? Thank you! or