The South Dakota Legislature recently received 19 property tax reform recommendations from a legislative task force. The Comprehensive Property Tax Task Force provided a broad range of ideas—some more impactful than others—aimed at improving South Dakota’s property tax system and delivering relief to taxpayers. The recommendations range from reducing government spending to increasing other taxes to offset property tax cuts, as well as redirecting funds from other sources to pay for property tax relief. These 19 proposals are not final, and when the Legislature reconvenes in January, additional ideas will likely be introduced.
The South Dakota task force’s work is another example of how states nationwide are struggling to address the challenge of property tax reform. In Iowa, the Department of Government Efficiency (DOGE) Task Force recently released its own set of recommendations, focused largely on local government efficiency and consolidation as tools for property tax relief.
Property tax reform is complex, and it’s common for lawmakers to consider a “menu of options.” However, among South Dakota’s 19 recommendations, some lawmakers are wisely circling around the root cause of high property taxes: government spending.
Speaker of the House and Task Force Vice Chair Jon Hansen has emphasized that lasting property tax relief must begin with spending cuts. “If we want real tax relief, it must come from cuts to government spending,” he said during the legislative session. Hansen and other Republicans on the House State Affairs Committee have consistently argued that property tax reform should begin with reducing government size and spending, even if it requires difficult conversations about education funding.
Focusing on spending restraint is the right approach, but it must be done carefully. And many of South Dakota’s reform options mask the underlying issue.
Speaker Hansen has proposed reducing the state’s General Fund by 5 percent, or roughly $123 million, with those savings redirected toward property tax relief. Since the state does not directly collect property taxes, this redirection would be an indirect form of relief. Critics have questioned whether such a cut is achievable, but Senator Taffy Howard counters that it’s entirely feasible, arguing that anyone unable to trim 5 percent should “go find a different job.”
Even if South Dakota realizes state-level savings, questions remain about whether this plan would deliver meaningful or sustained relief. Since local governments—especially school districts—could continue increasing spending, any state-level progress might easily be erased.
Another recommendation from South Dakota’s task force would establish a Property Tax Relief Fund, requiring 25 percent of each year’s ongoing state revenue growth to be deposited for future property tax relief. While this idea represents a long-term commitment, it too fails to address the underlying problem—unchecked local government spending.
Representative Greg Jamison has rightly argued that local governments must be part of the solution. In the last legislative session, he introduced a property tax bill that would further limit local governments’ annual increases in property tax collections from 3 percent to 2.5 percent, encouraging fiscal restraint and providing direct, lasting relief. While a plethora of options have been discussed, slowing the rate of local government spending growth is the only recommendation that meaningfully addresses the root of the property tax problem.
What Iowa Can Learn
Iowa policymakers should take several lessons from South Dakota’s experience. First, offering too many reform options can dilute focus and obscure the most meaningful solutions. Efficiency improvements, bonding reform, and consolidation all have merit, but without limits on local spending, none will deliver real property tax relief.
Iowa lawmakers must resist the temptation to use tax shifts or General Fund buy-downs to provide short-term relief. It would be a mistake to raise taxes, or create new ones, merely to offset property taxes. True reform begins and ends with controlling local government spending, and a 2 percent annual cap on total property tax collections would be a practical step forward. This isn’t even a cut—it simply slows the rate of growth.
Failing to address local spending while claiming to pursue property tax reform is like a dieter ordering a Diet Coke with a Double Burger Basket and a large Concrete Mixer for dessert—the Diet Coke may look like change, but the larger problem still remains.
Iowa’s property tax crisis is fundamentally a spending challenge, not a revenue challenge. As lawmakers continue to debate reform, they should focus squarely on limiting local government budgets—including those of school districts. The key to lasting property tax relief lies not in shifting dollars around, but in spending discipline at every level of government.
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