A Closer Look at Property Taxes

September 2024 | Eric Jennings, Lawrence County Commissioner Opinion Editorial, Black Hills Pioneer

When it comes to taxes, most sayings focus on the displeasure of paying them, however, taxes are necessary to finance the services that the government provides, services that all citizens reap the benefit of in one way or another. The county collects property tax from every non-exempt property owner, but the county, doesn’t keep all the tax dollars it collects. The county collects property tax for the other taxing entities in the county, and then distributes those funds to those taxing entities monthly. Taxing entities can include the school district, the city or municipality, a taxing fire or ambulance district, road district, sanitation district, or homeowners’ association. The county collects property tax for any entity that has a taxing capability. 

The budget for these taxing entities is what affects how much property tax you, as property owners, need to pay each year. The taxing entity determines their needs and approves a budget. The total need from the various entities determines how much money needs to be collected, which, based on the total valuation of the county, mathematically sets the mill levy applied to your tax notice.

The percentage of your total property tax dollars going to the various entities will vary from property owner to property owner, depending on the location of your property.  In Lawrence County, on a countywide basis, school districts receive 57%, the biggest share of your property tax.  The county is next on the list with a 24% share, followed by municipalities with 10%, and road, fire and utility districts taking up the remaining amount.  There can also be the occasional special assessment that gets added on to your tax bill that are usually onetime fees. 

State law determines how much property tax can be increased from one year to the next. The maximum is 3% year-over-year increase, or the inflationary growth factor of consumer price index (CPI), whichever is greater.  This year the CPI used by all governments is 3%.  If the needs are greater than the amount allowed by law to be collected, the law requires the taxing entity to seek an “opt out” that can be referred by the citizens of the taxing entity for a vote.  If an “opt out” is implemented, the total tax collected can be increased beyond the 3% limit.  One additional factor is that valuation from new growth is not included into the total when determining the 3% limit of increase in the total tax collected.  That is why the total tax collected can increase beyond the 3% limit.

Homeowners have expressed concern over the increase in property valuations Lawrence County homeowners have experienced the past 3 years. Valuations on homes and commercial property is determined by the sales of like property. State law requires counties to regularly update valuations at a 100% of the sales ratio level.  The county equalization department works hard to find sales of like property that match the size, condition, quality, age and neighborhood of your property.

While paying property taxes isn’t something any of us enjoy, knowing those dollars are needed by the various taxing entities to provide services that we enjoy and rely on within our communities, hopefully makes it a little more palatable.