SJR 507

 26.940.20  101st Legislative Session  SJR507
                                       2026 South Dakota Legislature
                                  Senate Joint Resolution 507
 Introduced by: Senator Hulse
1 A JOINT RESOLUTION proposing and submitting to the voters at the next general
2election, an amendment to state law to reduce certain property taxes for
3owner-occupied property, and to increase the rates for certain gross receipts
4taxes and use taxes.
5 BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
6 Section 1. That at the next general election held in the state, the following amendments to
7 state law as set forth in this Act, which is hereby agreed to, be submitted to the electors of
8 the state for approval.
9 Section 2. That § 10-12-42 be AMENDED:
1010-12-42. For taxes payable in 2026 2027, and each year thereafter, the
11     maximum levy for the general fund of a school district is as follows:
12     (1)      The maximum tax mill levy is five dollars and twenty-one and one-tenth cents per
13thousand dollars of taxable valuation, subject to the limitations on agricultural
14property as provided in subdivision (2) of this section and owner-occupied property
15as provided in subdivision (3) of this section;
16     (2)      The maximum tax mill levy on agricultural property for the school district is one
17dollar and twelve and five-tenths cents per thousand dollars of taxable valuation.
18If the district's levies are less than the maximum mill levies as stated in this section,
19the mill levies imposed in subdivision (1) and this subdivision must maintain the
20same proportion to each other as represented in the mathematical relationship at
21the maximum mill levies; and
22     (3)      The maximum tax mill levy for an owner-occupied single-family dwelling pursuant
23to § 10-13-40 for the school district is two zero dollars and fifty-one and eight-
24tenths zero cents per thousand dollars of taxable valuation. If the district's levies
25are less than the maximum levies as stated in this section, the levies must maintain
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1the same proportion to each other as represented in the mathematical relationship
2at the maximum levies.
3All levies in this section must be imposed on valuations where the median level of
4    assessment represents eighty-five percent of market value as determined by the
5    Department of Revenue. These valuations must be used for all school funding purposes.
6    If the district has imposed an excess levy pursuant to § 10-12-43, the levies must
7    maintain the same proportion to each other as represented in the mathematical
8    relationship at the maximum levies in this section. The school district may elect to tax at
9    less than the maximum amounts set forth in this section.
10 Section 3. That § 10-45-2 be AMENDED:
1110-45-2. There is hereby imposed a tax upon the privilege of engaging in business
12    as a retailer, a tax of four and two-tenths five percent upon the gross receipts of all sales
13    of tangible personal property consisting of goods, wares, or merchandise, except as
14    otherwise provided in this chapter, sold at retail in the state to consumers or users.
15 Section 4. That § 10-45-5 be AMENDED:
1610-45-5. There is imposed a tax, at the rate of four and two-tenths percent set
17    forth in § 10-45-2, upon the gross receipts of any person from engaging or continuing in
18    any of the following businesses or services in this state: abstracters
19(1)    Abstracters;
20(2)    accountantsAccountants;
21(3)    ancillaryAncillary services;
22(4)    architectsArchitects;
23(5)    barbersBarbers;
24(6)    beautyBeauty shops;
25(7)    billBill collection services;
26(8)    blacksmithBlacksmith shops;
27(9)    carCar washing;
28(10)   dryDry cleaning;
29(11)   dyeingDyeing;
30(12)   exterminatorsExterminators;
31(13)   garageGarage and service stations;
32(14)   garmentGarment alteration;
33(15)   cleaningCleaning and pressing;
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1(16)   janitorialJanitorial services and supplies;
2(17)   specialtySpecialty cleaners;
3(18)   laundryLaundry;
4(19)   linenLinen and towel supply;
5(20)   membershipMembership or entrance fees for the use of a facility or for the
6    right to purchase tangible personal property, any product transferred electronically, or
7    services;
8(21)   photographyPhotography;
9(22)   photoPhoto developing and enlarging;
10(23)   tireTire recapping;
11(24)   weldingWelding and all repair services, except repair services for farm
12    machinery, attachment units, and irrigation equipment used exclusively for agricultural
13    purposes;
14(25)   cableCable television; and
15(26)   rentalsRentals of tangible personal property, except leases of tangible
16    personal property between one telephone company and another telephone company,
17    motor vehicles as defined pursuant to § 32-5-1 leased under a single contract for more
18    than twenty-eight days, and mobile homes. However, the
19The specific enumeration of businesses and professions made in this section does
20    not, in any way, limit the scope and effect of the provisions of § 10-45-4.
21 Section 5. That § 10-45-5.3 be AMENDED:
2210-45-5.3. There is imposed, at the rate of four and two-tenths percent set forth
23    in § 10-45-2, an excise tax on the gross receipts of any person engaging in oil and gas
24    field services (, group no. 138), as enumerated in the Standard Industrial Classification
25    Manual, 1987, as prepared by the Statistical Policy Division of the Office of Management
26    and Budget, Office of the President.
27 Section 6. That § 10-45-6 be AMENDED:
2810-45-6. There is hereby imposed a tax of four and two-tenths percent, at the
29    rate set forth in § 10-45-2, upon the gross receipts from sales, furnishing, or service of
30    gas, electricity, and water, including the gross receipts from such the sales by any
31    municipal corporation furnishing gas, and electricity, to the public in its proprietary
32    capacity, except as otherwise provided in this chapter, when sold at retail in the State of
33    South Dakota this state to consumers or users.
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1 Section 7. That § 10-45-6.1 be AMENDED:
210-45-6.1. Except as provided in § 10-45-6.2, there is hereby imposed a tax of
3    four and two-tenths percent, at the rate set forth in § 10-45-2, upon the gross receipts
4    from providing any intrastate, interstate, or international telecommunications service that
5    originates or terminates in this state and that is billed or charged to a service address in
6    this state, or that both originates and terminates in this state. However, the tax imposed
7    by this section does not apply to:
8     (1)     Any eight hundred or eight hundred-type service, unless the service both originates
9and terminates in this state;
10     (2)     Any sale of a telecommunication service to a provider of telecommunication
11services, including access service, for use in providing any telecommunication
12service; or
13     (3)     Any sale of interstate telecommunication service provided to a call center that has
14been certified by the secretary of revenue to meet the criterion established in § 10-
1545-6.3 and the call center has provided to the telecommunications service provider
16an exemption certificate issued by the secretary indicating that it meets the
17criterion.
18If a call center uses an exemption certificate to purchase services not meeting the
19    criterion established in § 10-45-6.3, the call center is liable for the applicable tax, penalty,
20    and interest.
21 Section 8. That § 10-45-6.2 be AMENDED:
2210-45-6.2. There is hereby imposed a tax of four and two-tenths percent, at the
23    rate set forth in § 10-45-2, upon the gross receipts of mobile telecommunications services,
24    as defined in 4 U.S.C. § 124(7) as of (January 1, 2002), that originate and terminate in
25    the same state and are billed to a customer with a place of primary use in this state or
26    are deemed to have originated or been received in this state and to be billed or charged
27    to a service address in this state if the customer's place of primary use is located in this
28    state regardless of where the service actually originates or terminates. Notwithstanding
29    any other provision of this chapter and for purposes of the tax imposed by this section,
30    the tax imposed upon mobile telecommunication services must be administered in
31    accordance with 4 U.S.C. §§ 116- to 126, as in effect on, inclusive, (July 28, 2000).
32 Section 9. That § 10-45-8 be AMENDED:
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110-45-8. Except as otherwise provided in this chapter, there is imposed a tax of
2    four and two-tenths percent, at the rate set forth in § 10-45-2, upon the gross receipts
3    from all sales of tickets or admissions to:
4    (1)      Places of amusement;
5    (2)      Athletic contests; or
6    (3)      Events.
7 Section 10. That § 10-45-71 be AMENDED:
810-45-71. There is imposed a tax of four and two-tenths percent on, at the rate
9    set forth in § 10-45-2, on the gross receipts from the transportation of passengers. The
10    tax imposed by this section applies to any transportation of passengers if the passenger
11    boards and exits the mode of transportation within this state.
12 Section 11. That § 10-46-2.1 be AMENDED:
1310-46-2.1. For the privilege of using services in South Dakota this state, except
14    those types of services exempted by § 10-46-17.3, there is imposed on the person using
15    the service an excise tax equal to four and two-tenths five percent of the value of the
16    services at the time they are rendered.
17However, this This tax may not be imposed on any service rendered by a related
18    corporation, as defined in subdivision 10-43-1(11), for use by a financial institution, as
19    defined in subdivision 10-43-1(4) § 10-43-1; or on any service rendered by a financial
20    institution, as defined in subdivision 10-43-1(4) § 10-43-1, for use by a related
21    corporation as defined in subdivision 10-43-1(11).
22For the purposes of this section, the term, "related corporation," includes a means
23    a corporation associated with another as its parent or subsidiary, or in a brother-sister
24    relationship. The term includes a corporation, which together with the financial institution,
25    is part of a controlled group of corporations, as defined in 26 U.S.C. § 1563 as in effect
26    on (January 1, 1989), except that the eighty percent ownership requirements set forth in
27    26 U.S.C. § 563(a)(2)(A) § 1563(a) for a brother-sister controlled group are reduced to
28    fifty-one percent.
29For the purpose of this chapter, services rendered by an employee for the use of
30    the employer are not taxable.
31 Section 12. That § 10-46-2.2 be AMENDED:
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110-46-2.2. An excise tax is imposed upon the privilege of the use of rented
2    tangible personal property and any product transferred electronically in this state, at the
3    rate of four and two-tenths percent of set forth in § 10-46-2.1, on the rental payments
4    upon the property.
5 Section 13. That § 10-46-48 be AMENDED:
610-46-48. All revenue arising under the operation of Except as otherwise
7    provided, revenue collected pursuant to this chapter shall immediately must be turned
8    over to the state treasurer and by him credited to deposited in the general fund.
9The treasurer shall deposit in the local effort replacement fund, established in
10    section 25 of this Act, sixteen percent of the taxes collected by the secretary of the
11    Department of Revenue pursuant to this chapter.
12 Section 14. That § 10-46-58 be AMENDED:
1310-46-58. There is imposed a tax of four and two-tenths percent on, at the rate
14    set forth in § 10-46-2.1, upon the privilege of the use of any transportation of passengers.
15    The tax imposed by this section applies to any transportation of passengers if the
16    passenger boards and exits the mode of transportation within this state.
17 Section 15. That § 10-46-69 be AMENDED:
1810-46-69. There is hereby imposed a tax of four and two-tenths percent, at the
19    rate set forth in § 10-46-2.1, upon the privilege of the use of mobile telecommunications
20    services, as defined in 4 U.S.C. § 124(7) as of (January 1, 2002), that originate and
21    terminate in the same state and are billed to a customer with a place of primary use in
22    this state. Notwithstanding any other provision of this chapter and for purposes of the tax
23    imposed by this section, the tax imposed upon mobile telecommunication services must
24    be administered in accordance with 4 U.S.C. §§ 116-126, as in effect on (July 28, 2000).
25 Section 16. That § 10-46-69.1 be AMENDED:
2610-46-69.1. Except as provided in § 10-46-69, there is hereby imposed a tax of
27    four and two-tenths percent, at the rate set forth in § 10-46-2.1, upon the privilege of the
28    use of any intrastate, interstate, or international telecommunications service that
29    originates or terminates in this state and that is billed or charged to a service address in
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1    this state, or that both originates and terminates in this state. However, the The tax
2    imposed by this section does not apply to:
3    (1)      Any eight hundred or eight hundred type service unless the service both originates
4and terminates in this state;
5    (2)      Any sale of a telecommunication service to a provider of telecommunication
6services, including access service, for use in providing any telecommunication
7service; or
8    (3)      Any sale of interstate telecommunication service provided to a call center that has
9been certified by the secretary of revenue to meet the criterion established in § 10-
1045-6.3 and the call center has provided to the telecommunications service provider
11an exemption certificate issued by the secretary indicating that it meets the
12criterion.
13If a call center uses an exemption certificate to purchase services not meeting the
14    criterion established in § 10-45-6.3, the call center is liable for the applicable tax, penalty,
15    and interest.
16 Section 17. That § 10-46-69.2 be AMENDED:
1710-46-69.2. There is hereby imposed a tax of four and two-tenths percent, at the
18    rate set forth in § 10-46-2.1, upon the privilege of the use of any ancillary services.
19 Section 18. That § 10-46E-1 be AMENDED:
2010-46E-1. There is hereby imposed an excise tax of four and two-tenths five
21    percent on the gross receipts from the sale, resale, or lease of farm machinery, attachment
22    units, and irrigation equipment used exclusively for agricultural purposes.
23However, ifIf any trade-in or exchange of used farm machinery, attachment units,
24    and irrigation equipment is involved in the transaction, the excise tax is only due and may
25    only be collected on the cash difference.
26 Section 19. That § 10-46E-9 be AMENDED:
2710-46E-9. The Except as otherwise provided, revenue from the tax imposed by
28    this chapter shall must be deposited in the general fund.
29The treasurer shall deposit in the local effort replacement fund, established in
30    section 25 of this Act, sixteen percent of the taxes collected by the secretary of the
31    Department of Revenue pursuant to this chapter.
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1 Section 20. That § 10-58-1 be AMENDED:
210-58-1. There is imposed upon owners and operators a special amusement
3    excise tax of four and two-tenths five percent of the gross receipts from the sale or the
4    operation of any mechanical or electronic amusement device.
5The tax imposed by this section is in lieu of the tax imposed pursuant to chapter
6    10-45.
7 Section 21. That § 10-58-5 be AMENDED:
810-58-5. The Except as otherwise provided, the tax generated by this chapter
9    must be deposited in the general fund.
10The treasurer shall deposit in the local effort replacement fund, established in
11    section 25 of this Act, sixteen percent of the taxes collected by the secretary of the
12    Department of Revenue pursuant to this chapter.
13 Section 22. That § 13-13-71 be AMENDED:
1413-13-71. If local effort increases on a statewide aggregate basis by a greater
15    percentage than local need on a statewide aggregate basis from any one year to the next,
16    for the following year each of the mill levies specified in subdivision 13-13-10.1(13) shall
17    subdivisions 10-12-42(1) and (2) must be reduced proportionally so that the percentage
18    increase in local effort on a statewide aggregate basis equals the percentage increase in
19    need on a statewide aggregate basis.
20 Section 23. That § 13-13-72 be AMENDED:
2113-13-72. It is the policy of the Legislature that In 2028 and each year thereafter,
22    the appropriation for state aid to education must increase on an annual basis by the
23    percentage increase in local need on an aggregate statewide basis so that the relative
24    proportion of local need paid by local effort and state aid shall remain remains constant.
25    For school fiscal years 2017 to 2022, inclusive, the proportion of local need paid by local
26    effort and state aid shall be adjusted annually to maintain the proportion between state
27    aid and local property taxes and to reflect adjustments in local effort due to the
28    implementation of the other revenue base amount as defined in § 13-13-10.1.
29 Section 24. That § 13-13-72.1 be AMENDED:
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113-13-72.1. Any adjustments In 2028 and each year thereafter, any adjustment
2    in the levies specified in § 10-12-42 made pursuant to §§ 13-13-71 and § 13-13-72 shall
3    be based on maintaining must maintain the relationship between statewide local effort as
4    a percentage of statewide local need in the fiscal year succeeding the fiscal year in which
5    the adjustment is made. For school fiscal years 2017 to 2022, inclusive, the proportion of
6    local need paid by local effort and state aid shall be adjusted annually to reflect
7    adjustments in local effort due to the implementation of the other revenue base amount
8    as defined in § 13-13-10.1. However, if If the levies specified in § 10-12-42 are not
9    adjusted to maintain this relationship, the target teacher salary as defined in § 13-13-
10    10.1 shall be, must be reduced to maintain the relationship between for statewide local
11    effort as a percentage of statewide local need.
12 Section 25. That a NEW SECTION be added to chapter 13-13:
13There is created in the state treasury the local effort replacement fund. The
14    treasurer shall deposit in the fund sixteen percent of the taxes collected pursuant to:
15    (1)      Chapter 10-45;
16    (2)      Chapter 10-46;
17    (3)      Chapter 10-46E; and
18    (4)      Chapter 10-58.
19The Department of Education shall administer the fund. The purpose of the fund is
20    to supplement property tax local effort for school district general funds and special
21    education funds with state revenue. Interest on moneys credited to the fund must remain
22    in the fund. Expenditures from the fund must be budgeted through the general
23    appropriation bill.
24 Section 26. That § 13-37-16 be AMENDED:
2513-37-16. For taxes payable in 2026 2027, and each year thereafter, the school
26    board shall may levy no more than one dollar and forty-six and two-tenths cents per
27    thousand dollars of taxable valuation of property classified for purposes of taxation as
28    agricultural property and nonagricultural property, as a special levy in addition to all other
29    levies authorized by law for the amount so determined to be necessary, and the levy must
30    be spread against all of the taxable property of the district not classified as owner-occupied
31    single-family dwellings, as defined in § 10-13-39. The proceeds derived from the levy
32    constitute a school district special education fund of the district for the payment of costs
33    for the special education of all children in need of special education or special education
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1    and related services, who reside within the district, pursuant to the provisions of §§ 13-
2    37-8.4 to 13-37-8.10, inclusive.
3The levy in this section is based on valuations where the median level of
4    assessment represents eighty-five percent of market value as determined by the
5    Department of Revenue. The total amount of taxes that would be generated at the levy
6    pursuant to this section is considered local effort. Money in the special education fund may
7    be expended for the purchase or lease of any assistive technology that is directly related
8    to special education and specified in a student's individualized education plan. This section
9    does not apply to real property improvements.
10 Section 27. That § 13-37-35.1 be AMENDED:
1113-37-35.1. Terms used in chapter 13-37 mean:
12     (1)     "Level one disability," a mild disability;
13     (2)     "Level two disability," cognitive disability or emotional disorder;
14     (3)     "Level three disability," hearing impairment, deafness, visual impairment, deaf-
15blindness, orthopedic impairment, or traumatic brain injury;
16     (4)     "Level four disability," autism;
17     (5)     "Level five disability," multiple disabilities;
18     (5A) "Level six disability," prolonged assistance;
19     (6)     "Index factor," is the annual percentage change in the consumer price index for
20urban wage earners and clerical workers as computed by the Bureau of Labor
21Statistics of the United States Department of Labor for the year before the year
22immediately preceding the year of adjustment, or three percent, whichever is less;
23     (7)     "Local effort," must be an amount calculated for taxes payable in 2026 2027 and
24thereafter using a the maximum special education levy of one dollar and twenty-
25six and two-tenths cents per one thousand dollars of valuation set forth in § 13-
2637-16, imposed on the taxable valuation of property classified for purposes of
27taxation as agricultural property and nonagricultural property;
28     (8)     "Allocation for a student with a level one disability," for the school fiscal year
29beginning July 1, 2025, is $7,650.45. For each school year thereafter, the allocation
30for a student with a level one disability must be the previous fiscal year's allocation
31for the child increased by the index factor;
32     (9)     "Allocation for a student with a level two disability," for the school fiscal year
33beginning July 1, 2025, is $16,759.91. For each school year thereafter, the
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1allocation for a student with a level two disability must be the previous fiscal year's
2allocation for the child increased by the index factor;
3     (10) "Allocation for a student with a level three disability," for the school fiscal year
4beginning July 1, 2025, is $23,139.68. For each school year thereafter, the
5allocation for a student with a level three disability must be the previous fiscal
6year's allocation for the child increased by the index factor;
7     (11) "Allocation for a student with a level four disability," for the school fiscal year
8beginning July 1, 2025, is $18,053.89. For each school year thereafter, the
9allocation for a student with a level four disability must be the previous fiscal year's
10allocation for the child increased by the index factor;
11     (12) "Allocation for a student with a level five disability," for the school fiscal year
12beginning July 1, 2025, is $37,039.28. For each school year thereafter, the
13allocation for a student with a level five disability must be the previous fiscal year's
14allocation for the child increased by the index factor;
15     (12A)"Allocation for a student with a level six disability," for the school fiscal year
16beginning July 1, 2025, is $11,838.15. For each school year thereafter, the
17allocation for a student with a level six disability must be the previous fiscal year's
18allocation for the child increased by the index factor;
19     (13) "Child count," is the number of students in need of special education or special
20education and related services according to criteria set forth in rules promulgated
21pursuant to §§ 13-37-1.1 and 13-37-46 submitted to the Department of Education;
22     (14) "Fall enrollment," the number of kindergarten-through-twelfth-grade students
23enrolled in all schools operated by the school district on the last Friday of
24September of the previous school year minus the number of students for whom
25the district receives tuition, except any nonresident student who is in the care and
26custody of a state agency and is attending a public school and any student for
27whom tuition is being paid pursuant to § 13-28-42.1, plus the number of students
28for whom the district pays tuition;
29     (15) "Nonpublic school," a sectarian organization or entity accredited by the secretary of
30education for the purpose of instructing children of compulsory school age. This
31definition excludes any school that receives a majority of its revenues from public
32funds;
33     (16) "Nonpublic fall enrollment," the number of children under age eighteen, who are
34approved for alternative instruction pursuant to § 13-27-3 on the last Friday of
35September of the previous school year plus:
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1(a)   For nonpublic schools located within the boundaries of a public school
2district with a fall enrollment of six hundred or more on the last Friday of
3September of the previous school year, the number of kindergarten-
4through-twelfth-grade students enrolled on the last Friday of September of
5the previous regular school year in all nonpublic schools located within the
6boundaries of the public school district;
7(b)   For nonpublic schools located within the boundaries of a public school
8district with a fall enrollment of less than six hundred on the last Friday of
9September    of   the   previous   school   year,   the   number  of     resident
10kindergarten-through-twelfth-grade students enrolled on the last Friday of
11September of the previous school year in all nonpublic schools located
12within this state;
13     (17) "Special education fall enrollment," fall enrollment plus nonpublic fall enrollment;
14     (18) "Local need," an amount to be determined as follows:
15(a)   Multiply the special education fall enrollment by 0.1062 and multiply the
16result by the allocation for a student with a level one disability;
17(b)   Multiply the number of students having a level two disability as reported on
18the child count for the previous school fiscal year by the allocation for a
19student with a level two disability;
20(c)   Multiply the number of students having a level three disability as reported
21on the child count for the previous school fiscal year by the allocation for a
22student with a level three disability;
23(d)   Multiply the number of students having a level four disability as reported on
24the child count for the previous school fiscal year by the allocation for a
25student with a level four disability;
26(e)   Multiply the number of students having a level five disability as reported on
27the child count for the previous school fiscal year by the allocation for a
28student with a level five disability;
29(f)   Multiply the number of students having a level six disability as reported on
30the child count for the previous school fiscal year by the allocation for a
31student with a level six disability;
32(g)   When calculating local need at the statewide level, include the amount set
33aside for extraordinary expenses defined in § 13-37-40;
34(h)   When calculating local need at the statewide level, include the amount set
35aside for the South Dakota School for the Blind and Visually Impaired; and
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1(i)    Sum the results of subdivisions (18)(a) to (h), inclusive; and
2     (19) "Effort factor," the school district's special education tax levy in dollars per thousand
3divided by $1.262. The maximum effort factor is 1.0.
4 Section 28. That § 32-5B-20 be AMENDED:
532-5B-20. There is hereby imposed a tax of four and two-tenths five percent upon
6    on the gross receipts of any person renting a rental vehicle as defined in § 32-5B-19.
7This The tax applies to all vehicles registered in accordance with § 32-5-6, 32-5-
8    8.1, or 32-5-9. Any rental vehicle not licensed in accordance with § 32-5-6, 32-5-8.1, or
9    32-5-9 is subject to the motor vehicle excise tax in § 32-5B-1.
10The tax imposed by this section is in addition to any tax levied pursuant to chapter
11    10-45 or 10-46 upon the rental of a rental vehicle. The provisions of chapter 10-45 apply
12    to the administration and enforcement of the tax imposed by this section.
13The tax imposed by this section is in lieu of the tax levied by § 32-5B-1 on the
14    sales of such motor vehicles. A violation of this section is a Class 1 misdemeanor.
15 Section 29. That 2023 Session Laws, chapter 32, § 19 be REPEALED:
16Section 30. The amendments to the Code sections in sections 1 to 17, inclusive,
17    of this Act are repealed on June 30, 2027, and those Code sections will revert in word and
18    substance to that which existed immediately prior to the effective date of this Act.
19 Section 31. Sections 3 to 21, inclusive, section 25, and section 28 of this Act are effective
20 beginning January 1, 2027.
                                                                                Underscores indicate new language.
                                                                              Overstrikes indicate deleted language.