The Lake County commission held a special Town Hall meeting on Tuesday night to address the need for new funding and potential funding mechanisms.
The commission is seeking public comment regarding potential new lines of funding to address the county’s growing budget short falls. County administrative officer Shelli Gust, delivered a presentation regarding the history of county funding and budgets as well as potential budget shortfalls in the county going forward.
Part of that presentation focused on South Dakota‘s property tax reduction program, which was passed by Governor Janklow in 1995. Under that program, increases in property taxes are limited to the property tax dollars received in the previous year plus the annual increase provided by the index factor and the growth factor.
The index factor is the rate of inflation or 3%, whichever is less. Gust says that as a result of the current property tax system, counties are not allowed to generate enough revenue to keep up with current expenses. Lake County has been using reserve funds to balance their general fund budget every year since 2010. Including over $1.6 million in the 2023 budget year.
The two mechanisms available for the county to raise additional funds are a road and bridge levy and an opt-out. The highest a road and bridge tax levy could be is $.60 per thousand dollars a valuation, which would generate approximately $1.14 million. Those funds could only be used as reserve funds or for roads and bridges. An opt-out is used to establish a specific dollar amount for the county, but road and bridge levy revenue could be used to support the general fund.
In 2017, the county commission passed a $.90 per thousand dollar road and bridge levy that was referred to a public vote and defeated by Lake County voters. If county commissioners this year decide to support a road and bridge levy and or a tax opt- out, they must do so by July 15. Either a levy or an opt out could be referred by voters.