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The increase in property taxes payable to Pennington County will be half as big as originally projected, county commissioners learned before adopting their 2020 budget Tuesday at the County Administration Building in Rapid City.

The final budget will cause a property owner’s county taxes to increase by up to $2.40 per $100,000 of a property’s valuation. Under an earlier, provisional version of the budget, the increase was projected to be $4.80 per $100,000 of valuation.

County Auditor Cindy Mohler said the difference between the earlier projection and the new number is attributable to two factors: a tax increment financing district that was paid off and dissolved, and a substantial increase in the valuation of properties owned by utilities. Neither piece of information was available until after the preparation of the provisional budget, she said.

The tax increment financing district was created by Rapid City in 2003 to provide $4.75 million for the construction of a water reservoir in an area east of Elk Vale Road, south of I-90 Exit 61 and north of Twilight Drive.

During the life of the TIF district, new and higher property taxes paid by property owners within the district boundaries were diverted to pay back the city for the reservoir. Now that the debt is paid, those property taxes will flow to the county.

When the TIF district began, the total valuation of real estate within its boundaries was $723,760. Today, the total valuation of real estate within the district is upwards of $40 million.

Hani Shafai, who was involved in developing some of the district, said in a Journal interview after Tuesday’s meeting that hundreds of homes and apartment units and several businesses have been constructed there.

The addition of those property values into the county budget equation, plus the increase in utility assessments (for which Mohler did not have exact numbers handy), means the county’s tax levy will be spread across a bigger pool of valuation than Mohler previously projected.

After receiving that information, the commissioners voted 4-1 to approve the 2020 budget, which totals $103.92 million.

The “no” vote came from Commissioner Mark DiSanto, who repeated his earlier suggestion to save nearly $1 million by cutting cost-of-living raises for county employees. The suggestion found no support among the other commissioners, who proceeded to vote on the budget as a whole and passed it with their four “yes” votes.

The county’s 2020 budget is about 10 percent higher than the 2019 budget of $94.72 million. At past meetings, commissioners blamed the increase on infrastructure damages caused by blizzards and floods and rising law enforcement and criminal justice costs caused by methamphetamine and opioid addiction.

Another substantial increase is in the road and bridge fund, which is increasing from $10.07 million in the 2019 budget to $14.59 million in the 2020 budget. That includes money designated for major undertakings such as a Sheridan Lake Road reconstruction project and a South Rochford Road paving project.

Nearly half of the money to fund the county’s budget comes from property taxes, while the rest comes from fees, federal funds, grants and other sources. Property taxes are assessed according to a mill levy, which is a term describing the property tax rate per $1,000 of a property’s assessed value. The county mill levy in the 2020 budget is $6.118. The 2019 levy was $6.094.

In addition to the county, cities and school districts also levy property taxes.

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Contact Seth Tupper at seth.tupper@rapidcityjournal.com

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