DOE helps explain assessments and taxes

An outreach meeting on assessed value and property taxes drew a standing-room-only crowd to the Hill City Center March 19.

Pennington County director of equalization Shannon Rittberger shared a PowerPoint presentation and answered questions from concerned residents.

Rittberger explained the process for how property taxes are set. That  process begins with property assessment.

The county delineates several market areas including west Pennington County, east Pennington County, Nemo, Rockerville, Box Elder, different parts of Rapid City and Rapid Valley. A table he presented showed a 13.1 percent change in assessed value in the western part of the county, which includes areas like Deerfield, Rochford, Keystone and Hill City. Another table showed an average increase in assessed value by neighborhood, with Edelweiss, Hwy. 244 South and Rochford having near 30 percent increases.

By way of comparison the chart also showed Silver City assessments decreasing by 1.1 percent.

The average change in the county was 4 percent, Rittberger said.

Rittberger said he doesn’t have any solutions for increases in assessed value many residents are experiencing. 

“My job is to follow the law as it is written,” Rittberger noted.

He said the process is the same as any county in South Dakota. 

All the property taxes collected by the county remain in the county, albeit with varying taxing entities. The state does not collect property taxes nor does it receive property taxes.

“In South Dakota state law requires that all property is assessed at market value,” Rittberger said. Ag land, however, is exempt from this and its assessment  is based on productivity.

Rittberger has a staff of mostly appraisers who are  responsible for setting that appraised value which, he said, turns into the assessed value.

His office appraises properties using two approaches that apply to single-family homes. Rittberger explained the cost approach. 

“It costs you this much to build a house and we subtract depreciation if it’s an old house. We add the value of the land and that should be how much your house is worth,” Rittberger said.

A sales-comparison  approach says your house should be worth what similar houses are selling for but “there is no exact same house we have to adjust for differences,” Rittberger said.

Rittberger explained the process of appealing the assessed value. 

“If your property is assessed more than what you can sell it for, there’s an appeal process for that. There are assessments that get changed for good reasons many times,” he said.

Rittberger’s office does not change the assessment value. State law requires the change comes from a hearing with the city, then the  board of equalization and then the state. 

According to Pennington County commissioner Ron Rossknecht about two thirds of those who appealed to the county commission for assessment value changes are approved each year.

An exemption for elderly assessment freeze and disabled veterans are set up by state statute with Rittberger saying it is a “you qualify if this” type of program.

Other exemptions like churches and charities are approved by the county commissioners.  

“The public gets to see a list in the newspaper of everybody that is asking for that kind of exemption, then  the county commission approves or denies that,” Rittberger said.

After assessment notices are mailed out the county sets the total taxable valuation of the county.

The next step is the budgets of the various taxing entities. There are 207 taxing entities in the county. When people receive their property tax bill, they can see the various taxing entities they are paying into.

Rittberger used a sample tax bill in his outreach showing a property in Rochford that pays into  eight taxing entities including the county, Hill City School District, the West Dakota Water District and  the Rochford Fire District. 

“All of them have to meet and set their budget and decide how much property tax they’re gonna take in to do what they do,” Rittberger said. 

He also said people should attend the budget hearings of their taxing entities and hold them accountable. 

“Be specific. ‘We don’t need this to save tax revenue.’ Tell them,” he said.

The taxing entities’ budgets are restricted by state statute, which caps  the portion of their budget that comes from property taxes by 3 percent or the consumer price index, whichever is less. 

Taxing entities can also  increase it by the amount of new growth and “new growth is important to all of these tax districts, because a new house built will be paying taxes that weren’t paid last year,” Rittberger said.

New houses also require more services, though. 

A taxing entity can do an “opt out,” requesting more than the 3 percent for a specific reason for a certain period of time.

Once those entities meet the county calculates the levy, which is just a “mathematical thing,” Rittberger said.

The levy is set in December and then property tax bills are mailed in January of the following year. In some states the levy is set but in South Dakota it changes as the assessment changes.

Rittberger’s presentation stated “taxes increase when budgets increase” but if assessed values go up and budgets remain the same, taxes will also remain the same. 

“That’s why I encourage you to go to budget hearings,” Rittberger told the audience. 

About two thirds of the sample property tax bill shown in the presentation  went to Hill City School District, and 20 percent went to the county.

Seventy-five percent of the county’s budget is made up of public safety and general government. 

Rittberger’s own office budget is about $2 million and the treasurer’s is about $2.1 million.

Rittberger says everything his staff does is related to assessment. The county mailed out 54,000 tax notices.

All Black Hills National Forest land in the county does not pay property taxes.  The county receives payment in lieu of taxes (PILT) for this land.

This amount is “entirely up to the federal government” and varies from year to year.

Rittberger said “we don’t get as much money as a county that is entirely deeded and on the tax rolls,”  adding that PILT money  is “not equal to what would be paid in property taxes.”

Rittberger’s presentation can be found at pennco.org/equalization under the  “rising real estate market “heading.