Keeping it real: South Dakota legislator hopes to address high property taxes on grassland
District 30 South Dakota representative offers bill to update property tax law for grasslands
A legislator from Hot Springs, South Dakota, hopes to ease concerns of ranchers who say their grasslands could be overtaxed soon.
Because of the “proposed” new soil and tax tables from a 2021 amendment to the tax law, many landowners could be facing the possibility of their grasslands being valued at a cropland rate.
When SB 70 went into effect last July, it gave the state the ability to require counties to assess certain class 4 soils as cropland, even if the land itself is not being used as cropland, or perhaps has never been used as cropland. Some counties initiated this change for 2021, but some did not.
Because cropland is valued at a higher rate than grassland, the change is expected to increase some landowners’ assessments dramatically. Previous to the implementation of SB 70, county assessors had the ability to make decisions locally about how to assess such property.
Trish Ladner, a Representative for District 30, serving her second year in the South Dakota House of Representatives, has filed HB 1039, which will allow for some exemptions, which should provide some relief for West River landowners. Ladner’s bill does not supplant any existing laws, but does offer the ranchers an additional avenue to allow for grassland that has not been cropped for the past 20 years, is located 1,950 feet above sea level or more, or is native grassland, to be assessed as grassland, regardless of the soil classification.
“Ranchers are facing the potential of an astronomical increase to their assessments,” said Ladner. In most of western South Dakota, assessments are expected to increase anywhere from 60 to 280 percent on ranches with new class 3 and 4 soils if the new soil tables are implemented, she said.
The state, working in conjunction with Dr. Elliott at SDSU conducted a new soil assessment using Artificial Intelligence (AI), without boots on the ground, said Ladner. This new soil survey identified ribbons and patches of class 3 and 4 soils, which tend to be fertile soils. Ladner noted that, “These patches and ribbons are found in scattered parcels, but are not necessarily in areas that are farmable, either due to location, elevation, lack of rainfall, size, or other factors.” “According to the Fall River County Assessor, this bill would solve 85% of the issues facing our ranchers and provides an additional avenue that the rancher can use if their land has class 3 or 4 soils that are not appropriate for farming, or they have simply determined that the best management for that land is grazing, rather than farming.”
Ladner said it is her understanding that even the more fertile soil types located in higher elevations have shorter growing seasons and cooler temperatures which do not allow for farming. This is the reason she included the elevation factor in her bill.
Randy Schroth, who ranches in Custer County, which neighbors Fall River County, said because of water availability and low rainfall, some ranchers in his area figure they need 60-70 acres to feed a cow for a year. He said financially, it will not pencil out for that land to be taxed at a cropland rate.
Custer County initially began assessing all class 4 soils as cropland for the 2021 tax year, but the Department of Revenue decided to hold off for a year or two before implementing that change and many ranchers requested adjustments due to the fact that the best use of their land is grazing.
“We have some parcels that would be valued 200 percent higher,” said Schroth. If Ladner’s bill or some other change isn’t approved, taxes will drastically increase for Schroth and many others. Schroth said he is already paying about $70 per cow in state property taxes and he figures his profit margin was around $20 per cow in 2021, after paying ranch expenses such as feed, fuel, taxes, etc. This does not take into consideration living expenses. Schroth said this year, in order to show the county assessor that his property was not suitable for farming, he provided information and pictures about moisture, rocks, terrain, etc.
Schroth took Ladner and others on a tour of some of his property recently so they could get a good look at it. “It would be literally impossible to get farm equipment to some of this ground. Well, I guess you could helicopter it in…” he said.
“Some of it is pretty fertile soil,” he said. “And if you farmed it, the runoff would be down around those rocks. It’s good soil but to use it for anything other than grazing would be impossible and irresponsible,” he said.
Fall River County Commission chairman and rancher Joe Falkenburg supports Ladner’s bill and is helping distribute petitions around Fall River County for fellow landowners to sign in order to show their support for the bill.
“We’re encouraging people to sign the petitions if they support our efforts,” he said. He believes the bill will help to lower appraisals, which will indirectly lower taxes in most cases, he said.
“I think we need more latitude for the counties. They shouldn’t have the state looking over their shoulder. Out here these lands are growing grass,” he said.
Falkenburg is concerned that the current rules have taken too much authority away from counties and placed it in the state government’s hands.
Schroth said Custer County, where he ranches, is composed of a significant amount of federal and state land. He points out that, in most cases grazing plans on federal land agencies such as U.S. Forest Service or Bureau of Land Management, call for low stocking rates. At the same time, the government has implemented property taxes at such a rate that ranchers are forced to stock their pasture much more heavily in order to attempt to pay their taxes.
“You take Forest Service or BLM and they will tell you how many acres per cow – say 50-60 acres per cow. But on land that’s identical, but privately owned, in order to pencil it out, you’ll have to run 3-4 times that many cows to pay the taxes,” he said.
Shroth would like to see property taxes based on carrying capacity rather than soil type.
Falkenburg said the Ladner bill will offer needed relief. He would also like to see a law change that allows for the more extreme sales to be discarded, in order to determine ag land value. “I would like to see the top and bottom sales thrown out, when computing averages,” he said. Many “ag” sales in the Black Hills are very expensive because of scenery, recreation, tourism or other factors, he said.
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