Attorney General Explanation
The Constitution permits the Legislature to
classify real property for school taxation purposes, but limits
agricultural property to a single class.
Amendment F would permit an unlimited number of
classes of agricultural property for school taxation purposes. The
number of classes and the tax rate for each class would be set by
the Legislature. All property would still be assessed at or in equal
proportion to its fair market value.
Amendment F may conflict with Amendment A. If both
constitutional amendments pass and are found to conflict with each
other, one or both could be declared void.
A vote "Yes" will allow any number of classes of
agricultural property for school taxation purposes.
A vote "No" will leave the Constitution as it
Pro - Constitutional Amendment F
This proposed amendment to our State’s
Constitution would make it possible to have more than one class of
Agricultural Property for tax purposes.
The present constitutional language permits, but doesn’t require, an
agricultural class of property. The Supreme court, in a recent
decision, ruled that although the language is permissive, it is
still restrictive in that we can only have one class of Agricultural
Property. By this interpretation, they struck down a law that placed
land which sold for a very high price in a separate class called
These high priced sales usually take place in areas where there is
urban development, recreational opportunities, aesthetic values, or
other things that have no relationship to the land’s ability to
generate agricultural income.
In some counties by including all these high sales in the market
ratio analysis, it will drastically increase valuations and cause
taxes on land to become so high it will force the owners to sell the
land rather than leave it in agriculture. A worse case example would
be no pastures or hay meadows in the Black Hills.
Several states have laws, which allow land to be taxed at it’s
actual use, rather than it’s highest and best use. If the land is
sold and a change in use results, e.g. housing or commercial where
it was agricultural, then the property is revalued. This type of law
would probably be unconstitutional under our present wording but
would be permissible with this proposed amendment.
A problem with the current property valuation and taxation procedure
is that it’s built on averaging; thus, some properties are over
valued and over taxed while others are under valued and under taxed.
In order to have equity, we must allow for more than one class of
Agricultural property which will minimize the problem of averaging.
As our state’s economy continues to change, it is imperative that
the Legislature be permitted to properly classify all property.
Submitted by: Rep. Larry Gabriel, HC 84 Box 22, Cottonwood, SD
57775. Rep. Gabriel is a rancher from Haakon County and represents
legislative district 26.
Con - Constitutional Amendment F
This amendment would create another class of agricultural land for
tax purposes called non-agricultural acreage, by creating two
classes of agricultural property, one that’s sold for less than 150
percent of its agricultural income value and one that sold for more
than 150 percent of its agricultural income value.
The County assessor’s tell me it would be very difficult to
implement, and since it was judged to be unconstitutional by the
Supreme Court in 1997, this would seem to be a wasted effort.
Amendment F is another attempt to allow agricultural property to be
split into two different classes, which in effect creates the tax
increase on those who paid too much for their property, the courts
determined that valuing property solely on its sales price and not
accounting for any agricultural factors such as type of soil,
terrain, climate, productivity, etc.. Was unconstitutional. The
court rejected the idea that the property had to be economically
self-sufficient and determined the property should not be separately
classified simply because the owner may have paid too much.
This amendment if passed, will end up in front of the Supreme Court
again, costing the taxpayers more money.
I would recommend a no vote on amendment F.
Submitted by: Rep. Doug Johnson, RR 1 Box 49, Elkton, SD 57026. Rep.
Johnson represents legislative district 8.