The proposed bill aims to reform property tax and education funding in South Dakota by establishing a property tax local effort replacement fund and adjusting various tax rates. Notably, it changes the maximum levy for school district general funds from five dollars and twenty-one and one-tenth cents per thousand dollars of taxable valuation to zero dollars and zero cents for taxes payable in 2027 and thereafter. Additionally, the bill increases the gross receipts tax rate from four and two-tenths percent to six and two-tenths percent, applying this new rate to a range of services, including telecommunications and transportation. It also mandates that thirty-two and three-tenths percent of the taxes collected under these new provisions be deposited into the local effort replacement fund to support local educational funding.

Moreover, the bill modifies the special amusement excise tax, raising it from four and two-tenths percent to six and two-tenths percent on gross receipts from amusement devices. It simplifies the funding structure for education by repealing certain provisions related to local effort and state aid adjustments, while ensuring that appropriations for education increase annually based on local needs. The bill introduces new definitions and calculations for local effort and local need, particularly for students with disabilities, and is set to take effect on July 1, 2027, allowing for a transition period for stakeholders.

Statutes affected:
Introduced, 01/19/2026: 10-12-42, 10-45-2, 10-45-5, 10-45-5.3, 10-45-6, 10-45-6.1, 10-45-6.2, 10-45-8, 10-45-71, 10-46-2.1, 10-46-2.2, 10-46-48, 10-46-58, 10-46-69, 10-46-69.1, 10-46-69.2, 10-46E-1, 10-46E-9, 10-58-1, 10-58-5, 13-13-72, 13-13-72.1, 13-13-78, 13-13-92, 13-37-16, 13-37-35.1, 32-5B-20, 32-5B-25, 13-13-71, 13-37-16.2, 13-37-16.3