After the 1994 Legislature passed HB 1255 pushing back the deadline for the Secretary of Revenue to withhold personal property tax replacement funds for nonagricultural assessment violations, can a South Dakota county commission pass a resolution rolling back agricultural land assessments to 1993 levels?
Plain-English summary
Tripp County taxpayers, advised by a Winner attorney, proposed that the County Commission pass a resolution rolling back agricultural land assessments to 1993 levels. Their theory was that the 1994 amendment to SDCL 10-6-33.10 (House Bill 1255) reflected legislative intent to permit such a rollback. HB 1255 had delayed the date on which the Secretary of Revenue could withhold personal property tax replacement funds from counties whose nonagricultural property assessments did not comply with SDCL chapter 10-6. The taxpayers read that delay as a legislative go-ahead to rebase agricultural valuations.
The 1994 AG read the statute and the legislative history and said no.
The reading is straightforward. HB 1255 changed only the nonagricultural date. The agricultural date remained where the 1993 Legislature set it. The bill did not amend SDCL 10-6-33 (the "true and full value" requirement), did not amend SDCL 10-6-33.1 (the value standard), and did not authorize any rollback by any county. The most the bill did was give counties more time to come into compliance before the Secretary started withholding replacement funds; it did not change the substantive valuation rule.
The AG also worked through the structural logic. SDCL 10-6-33.10's compliance determination looks at the two years preceding the determination. For nonagricultural property, the 1994 determination examines 1992 and 1993. For agricultural property, the 1995 determination examines 1993 and 1994. So the actions a county takes in 1994 directly drive whether the Secretary withholds funds in 1996 for agricultural noncompliance. Reading HB 1255 to authorize a 1993-level rollback would, in effect, be reading the Legislature to have invited counties to take an action in 1994 that would automatically produce a Secretary determination of noncompliance in 1995 and withholding in 1996. That is not a plausible reading of legislative intent.
The opinion closed with two qualifications. First, in some circumstances, a local or county board of equalization does have authority to roll back property values, citing SDCL 10-11-26 and Hot Springs Independent School District No. 10. But those circumstances are not present here, and a county board of equalization is a creature of statute that can exercise only powers expressly granted. The 1994 amendment did not grant rollback authority. Second, the AG flagged that property taxes were the leading topic for the next legislative session, so the answer was subject to legislative change.
The bottom line: the Tripp County Commission could not pass the proposed resolution without violating SDCL 10-6-33 and 10-6-33.1.
Currency note
This opinion was issued in 1994. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. SD property tax law has been amended substantially since 1994, including major restructuring of agricultural-property assessment under the productivity-based valuation system. The personal property tax replacement framework has also evolved. The general principle (counties cannot unilaterally roll back assessments below the statutory standard) has held up, but the specific statutory citations and compliance dates are now historical.
What the opinion meant at the time
For Tripp County commissioners in 1994, the opinion was clear: the proposed resolution was not lawful. Passing it would expose the county to enforcement action when the Secretary made the 1995 compliance determination.
For SD county directors of equalization handling agricultural-land valuations in the 1990s, the opinion confirmed that the true-and-full-value standard remained the controlling rule, regardless of the delayed enforcement date for personal property tax replacement withholding.
For agricultural landowners hoping for a 1993-level reset, the opinion meant the legal path forward ran through the Legislature, not through county resolutions. The AG himself flagged the upcoming legislative session as the venue for property tax reform.
For school districts depending on accurate valuations for funding calculations, the opinion preserved the integrity of the assessment framework. A county rollback would have distorted the basis on which school funding allocations were calculated.
For other counties tempted to take similar action, the opinion served as warning: HB 1255 was a deadline delay, not a substantive change in the valuation rule.
Common questions
Q: What did HB 1255 actually change?
A: It pushed back the date on which the Secretary of Revenue could withhold 50% of personal property tax replacement funds from counties for assessment noncompliance. For nonagricultural property, the new date was January 1, 1995. For agricultural property, the date remained January 1, 1996.
Q: Why didn't HB 1255 authorize a rollback?
A: It only amended the dates in SDCL 10-6-33.10. It did not change the substantive valuation rule in SDCL 10-6-33 (true and full value), the ratio rule in SDCL 10-6-33.8 (85% to 100%), or the dispersion rule in SDCL 10-6-33.9 (not over 25%).
Q: What is "true and full value"?
A: The SDCL 10-6-33 requirement that all property be assessed at its actual market value as of the assessment date. The Legislature has consistently required this standard even when enforcement has been spotty.
Q: When does the Secretary determine compliance?
A: For nonagricultural property, in 1994 (looking at 1992 and 1993). For agricultural property, in 1995 (looking at 1993 and 1994). If noncompliance is found, the Secretary withholds 50% of personal property tax replacement funds in the following year.
Q: Can a county board of equalization ever roll back values?
A: In some circumstances, yes, under SDCL 10-11-26 and case law like Hot Springs Independent School District No. 10. But a county board is a creature of statute with only expressly-granted powers, and HB 1255 did not grant any new rollback authority.
Q: What happens if a county passes the rollback resolution anyway?
A: The county would violate SDCL 10-6-33 and 10-6-33.1, distort the SDCL 10-6-33.8 and 10-6-33.9 calculations, and likely trigger Secretary findings of noncompliance and withholding of replacement funds in the following year.
Q: Could the Legislature have authorized a rollback?
A: Yes, the Legislature has plenary authority over property tax. It did not do so in HB 1255. Any later authorization would require a separate enactment.
Q: What were "personal property tax replacement funds"?
A: After SD eliminated most personal property taxes, the state distributed replacement money to counties through SDCL 10-13A-3.1. The replacement funds were a significant revenue stream for counties, which is why the threat of withholding had real bite.
Background and statutory framework
South Dakota property tax law rests on the constitutional and statutory rule that property is assessed at its true and full value (SDCL 10-6-33 and 10-6-33.1). Statewide, county compliance with this rule has historically been uneven, as documented in Rapid City Area School District No. 51-4 v. Pennington County Auditor.
To encourage compliance, the 1989 Legislature enacted SDCL 10-6-33.10. The statute allowed the Secretary of Revenue to withhold 50% of a county's personal property tax replacement funds if the county failed to comply with the valuation rules. Two measurements drove the noncompliance finding: SDCL 10-6-33.8 (median sales-to-assessment ratio must be 85% to 100%) and SDCL 10-6-33.9 (coefficient of dispersion must not exceed 25%).
The original withholding start date was January 1, 1993. A 1990 amendment (S.L. 1990, ch. 71, § 5) pushed it to January 1, 1994. The 1993 Legislature pushed the agricultural date to January 1, 1996 (S.L. 1993, ch. 81, § 10). The 1994 HB 1255 pushed only the nonagricultural date to January 1, 1995, leaving the agricultural date untouched.
The 1994 AG's reading of HB 1255 is grounded in the principle that statutes are read for what they say. Appeal of AT&T Information Systems directs interpreters to examine the words used in the statute and related statutes. American Rim and Brake Inc. v. Zoellner, Border States Paving, and Whalen v. Whalen all reinforce the plain-meaning rule. HB 1255 said it was changing dates. It did not say it was authorizing rollbacks.
The structural argument is the more compelling one. The Legislature could not have intended HB 1255 to authorize counties to take an action in 1994 that would automatically trigger a Secretary noncompliance finding in 1995 and withholding in 1996, because the same Legislature was the source of both the date change and the underlying valuation rule.
The opinion's closing reference to local and county boards of equalization (SDCL 10-11-26 and Hot Springs Independent School District No. 10) is a defensive aside: those boards have some limited rollback authority in some circumstances, but those circumstances were not present here, and even there the authority is statute-bound. Tripp County could not get to its desired outcome through any of the available authorities.
Citations and references
Statutes and session laws:
- SDCL 10-6-33 (true and full value)
- SDCL 10-6-33.1 (value standard)
- SDCL 10-6-33.8 (sales-to-assessment ratio)
- SDCL 10-6-33.9 (coefficient of dispersion)
- SDCL 10-6-33.10 (Secretary withholding authority)
- SDCL 10-6-59 (dispersion calculation)
- SDCL 10-11-26 (boards of equalization)
- SDCL 10-13A-3.1 (personal property tax replacement)
- 1994 HB 1255
- S.L. 1990, ch. 71, § 5
- S.L. 1993, ch. 81, § 10
Cases:
- Rapid City Area School District No. 51-4 v. Pennington County Auditor, 284 N.W.2d 308 (S.D. 1979)
- Appeal of AT&T Information Systems, 405 N.W.2d 24 (S.D. 1987)
- American Rim and Brake Inc. v. Zoellner, 382 N.W.2d 421 (S.D. 1986)
- Border States Paving v. Department of Revenue, 437 N.W.2d 872 (S.D. 1989)
- Whalen v. Whalen, 490 N.W.2d 276 (S.D. 1992)
- Hot Springs Independent School District No. 10 v. Fall River Landowners Association, 262 N.W.2d 33 (S.D. 1978)
Source
Original opinion text
OFFICIAL OPINION NO. 94-13
SDCL 10-6-33.10
Dear Mr. Pahlke:
You have requested my opinion concerning the following factual situation:
FACTS:
Certain taxpayers in Tripp County, under the advice of a Winner attorney, have proposed that the Tripp County Commissioner adopt a resolution reducing the taxable value of all agricultural land to its 1993 assessed valuation. They want the assessed value of agricultural real property, but not nonagricultural real property, rolled back to 1993 levels.
The taxpayers' request is based on House Bill 1255, which passed in 1994 and amended SDCL 10-6-33.10. HB 1255 pushed back the date that personal property replacement funds could be withheld by the Secretary of Revenue for violations of statutes governing the assessment of nonagricultural property. The old date for withholding such funds was January 1, 1993. Effective July 1, there will be no withholding of personal property tax replacement dollars until after January 1, 1995 for nonagricultural property assessment violations and after January 1, 1996 for agricultural property assessment violations.
The taxpayers who presented the resolution argue that the purpose of HB 1255's extension of time was to allow a rollback of agricultural land values to 1993 levels, as proposed by the resolution. The County's position is that it would be a violation of the law to pass the resolution. In 1993, the County would not have been in compliance as required by SDCL 10-6-33.10.
Based upon these facts, you have asked the following question.
QUESTION:
May the Tripp County Commission pass the proposed resolution without being in violation of SDCL 10-6-33.10 (as amended by HB 1255) and other laws?
IN RE QUESTION:
SDCL 10-6-33 requires that "[a]ll property shall be assessed at it true and full value in money." Statewide, county compliance with that legislative mandate has in the past proven spotty. See, e.g., Rapid City Area School District No. 51-4 v. Pennington County Auditor, 284 N.W.2d 308, 311 (S.D. 1979). Consequently, in 1989 the Legislature enacted SDCL 10-6-33.10 to encourage compliance. The statute provided that fifty percent of the personal property tax replacement monies a county receives pursuant to SDCL 10-13A-3.1 would be withheld if the county did not value real property in compliance with SDCL Chapter 10-6. The authority for the Secretary of Revenue to withhold the funds was to commence January 1, 1993. (Notably, a 1990 amendment to SDCL 10-6-33.10 (SL 1990, ch. 71, 5) extended the withholding date from January 1, 1993 to January 1, 1994.)
After a determination by the Secretary in 1993 to implement the withholding of property tax replacement funds for several counties, the 1994 Legislature postponed the Secretary's power to so withhold those funds. As of July 1, 1994, SDCL 10-6-33.10 provides in relevant part:
After January 1, 1995, the secretary of revenue shall withhold fifty percent of the money distributed to a county pursuant to 10-13A-3.1 if a county fails to value all nonagricultural real property pursuant to this chapter or violates 10-6-33.8 or 10-6-33.9 in the two preceding years. After January 1, 1996, the secretary of revenue shall withhold fifty percent of the money distributed to a county pursuant to 10-13A-3.1 if a county fails to value all real property pursuant to this chapter or violates 10-6-33.8 or 10-6-33.9 in the two preceding years.
This statute allows personal property replacement funds to be withheld for several reasons. SDCL 10-6-33.8 provides that the median sales to assessment ratio for real property in the county may not be less than eighty-five percent, nor more than one hundred percent. SDCL 10-6-33.9 provides that the "coefficient ratio of dispersion for real property in a county, as calculated pursuant to 10-6-59, may not be more than twenty-five percent." Violation of either of those statutes in the two years preceding a compliance determination by the Secretary is grounds for withholding personal property tax replacement funds. Failure to assess property at its true and full value also is grounds for withholding such funds.
The taxpayers who proposed the resolution claim that the postponement of the Secretary's power to withhold funds evinces a legislative intent to roll back assessments for agricultural real property to 1993 assessment levels. The County, however, contends that adoption of the resolution would place Tripp County in violation of SDCL 10-6-33.10.
The answer to the question is a matter of statutory construction; the goal is to determine the intent of the Legislature. It is appropriate to look not only to the words used in the statute at issue, but also to examine other statutes on the subject as well. Appeal of AT&T Information Systems, 405 N.W.2d 24, 27 (S.D. 1987). Words used in the statute are to be given their plain, ordinary and popular meaning, unless the context clearly requires otherwise. SDCL 2-14-1; American Rim and Brake Inc. v. Zoellner, 382 N.W.2d 421 (S.D. 1986); Border States Paving v. Department of Revenue, 437 N.W.2d 872, 874 (S.D. 1989); Whalen v. Whalen, 490 N.W.2d 276 (S.D. 1992).
My examination of the relevant statutes convinces me that the Legislature did not intend to roll back assessments for agricultural property to 1993 levels. First, I note that the only date for withholding funds extended by HB 1255 was the date dealing with nonagricultural property. House Bill 1255 delayed the start date for the Secretary to begin withholding funds for nonagricultural property to January 1, 1995. No change was made in the start date with respect to agricultural real property. The pertinent withholding date for agricultural property is January 1, 1996. That date was set during the 1993 Legislative Session, and was not changed in 1994. S.L. 1993, ch. 81, § 10.
Further, adoption of the position urged by the resolution would be contrary to the mechanism set forth in the statute for determining compliance with valuation requirements. A determination whether a county complies with SDCL 10-6-33.8 and SDCL 10-6-33.9 so as to avoid the withholding of funds requires the Secretary to examine the two years preceding the compliance determination. Thus, for nonagricultural property, the Secretary will have to determine in 1994 whether the County is in compliance. The two pertinent years to be examined are 1992 and 1993. If there is noncompliance, the Secretary may withhold funds in 1995.
For agricultural property, however, the determination of compliance will be made in 1995, and the two years examined for purposes of the determination will be 1993 and 1994. If there is noncompliance, funds will be withheld in 1996. Thus, action that a county takes in 1994 with reference to its assessed valuation of agricultural lands will directly impact whether the Secretary may withhold personal property tax replacement funds from that county in 1996. It is difficult for me to believe that having established this system, the Legislature then intended to allow a rollback of agricultural land valuations to 1993 assessment levels without any regard to 1994 true and full values. This is especially true when the likely result of such action would be a determination by the Secretary in 1995 that there is noncompliance under SDCL 10-6-33.10.
I am assuming from the facts you provided that 1993 assessed values do not reflect the current true and full value of the property. Using figures that do not reflect the true and full value of the property in 1994 would not only violate SDCL 10-6-33 and SDCL 10-6-33.1, but undoubtedly will skewer the results of the calculations under SDCL 10-6-33.8 and SDCL 10-6-33.9. In my opinion, the Legislature adopted HB 1255 simply to delay the effective date of implementing the withholding provisions for nonagricultural property; it did not intend a rollback to 1993 assessment levels for agricultural real property.
Finally, there may well be circumstances where a local board of equalization or a county board of equalization has the authority to roll back real property values. See, e.g., SDCL 10-11-26; Hot Springs Independent School District No. 10 v. Fall River Landowners Association, 262 N.W.2d 33, 40 (S.D. 1978). That, however, need not be determined here because, based on the facts you provided, this is not one of those circumstances. A county board of equalization is a creature of statute and can exercise only those powers expressly granted by statute, which statutes are to be strictly construed. Rapid City Area School District No. 51-4 v. Pennington County Auditor, 284 N.W.2d 308, 311 (S.D. 1979). The 1994 amendment to SDCL 10-6-33.10 enacted through HB 1255 neither grants the county board of equalization authority to roll back agricultural land values to 1993 assessment levels, nor reflects a legislative intent that such a rollback be undertaken. My answer to your question is "No."
Having answered your question based on the law as it currently exists, I will also remind you that property taxes will be the leading topic of the next legislative session, and therefore my answer is subject to legislative changes in direction.
MB:HHD:clr