At last night’s Mitchell City Council meeting, an oft-repeated claim was made about Mitchell supposedly having the highest or among the highest property taxes in the state:
Roger Musick, CEO of Innovative Systems, addressed the council Monday and spoke in favor of the proposal. Musick said a city administrator in the city’s government could help reduce the city’s property tax rates, which are among the highest in the state for similar-sized cities.
“I think it’s time for a change,” he said. “We’ve tried it for 100-plus years this way, and the result is taxes that are too high.”
I’ve heard that claim repeatedly since I began working here in 2003, and I did a story on it in 2007 to check the validity of the claim. I found back then that Mitchell’s property tax rate per $1,000 of valuation was actually the third-highest among the state’s largest cities. I also found that the issue was much more complex than many people might have guessed. Brookings, for example, had all kinds of city-owned businesses — including the hospital and the local telecommunications provider — that brought in extra revenue and reduced the burden on property tax payers. Other cities didn’t have that extra revenue.
I hope to have a reporter check again soon on the claim about Mitchell’s high property tax rates, since it’s now being used in support of a proposal to add a city administrator to city government.
In the meantime, in case you’re curious, here’s my story from April 21, 2007:
Wide gap in city property tax rates
Huron has highest in state; Mitchell 3rd
By SETH TUPPER
The Daily Republic
The property tax rates payable this year to South Dakota’s 10 largest cities vary widely, from a low of $2.61 per $1,000 of valuation in Brookings to a high of $10.788 in Huron.
Why the large gap? Experts in taxation and public finance cite two main factors: differences in property values from city to city, and the funding that cities get from other sources besides property taxes.
The alternate funding is the easier of the two explanations to understand.
Take Brookings, for example, which has an unusually high number of what are called “business-type” activities. Martin Guindon, the state’s auditor general, said the money Brookings pulls in from those activities may help drive down the city’s property tax rate.
“That’s probably one of the bigger factors, I think,” Guindon said.