Shooting Muskrats and Raising Tax Caps

Inside Dakota Ag

What the South Dakota legislature may do this session might have you thinking like Doug Sombke. He says he approaches it like an optimstic pessimist.

Published on: January 23, 2012

Doug Sombke, South Dakota Farmers Union president and a Conde, S.D. farmer, says he’s an optimistic pessimist . He hopes for the best but plans for the worst.

He described himself that way in his latest Union Farmer column, in which he described what he expects to see happen at the state legislature this year.

It’s worth passing on.

“First I predict there will be no dramatic change in South Dakota laws addressed by the state legislature this year,” he wrote. “There will be no major tax reform to address several of South Dakota’s needs to fund updates in our infrastructure for our citizens and education of our children or caring for our elderly.”

“I do however hope state legislators consider adjusting the gross receipts tax our rural electric cooperatives pay. Even though state law limits tax increases applied to other utilities to a maximum of 3% per year, gross receipt taxes paid by electric cooperatives have increased by an average of 9.7% per year over the past 10 years. This means, you, the owner/consumer of your electric cooperative, are paying the higher tax in your electric rates. Changing this law to an average increase per year of 3.7% would improve tax parity with other electric power provides. This would simply replace the gross tax receipt tax with a kilowatt-hour tax.

I predict that there will be some action by our state ag department to address water drainage on a statewide basis, most concerning water along the James River and its tributaries.

“I also predict damage to our roads by muskrats will be an issue in Pierre as well. Game Fish and Parks has allowed certain counties to shoot muskrats because are damaging dams holding water. But, the damage muskrats are causing to our roads is not be addressed in the manner.”

I’ll add my own predictions here, based on what I’ve heard in recent weeks.

There might be legislation to raise the cap on how much taxes can rise annually on ag land. Seems like with the recent dramatic increases in land prices, a big gap has developed between what the taxes should be based on value, and what are they are because of the limit. If the gap were closed in one fell swoop, it would be a shocker.

There also might be another attempt to pass an immigrant labor bill that will make it tougher for farms – especially dairies – to operate.

And there is a chance that some in the legislature may introduce a bill a bill that expands sale tax to cover more ag inputs – all in the names of equity and fairness.

And the Humane Society of the United States is out there. Who knows what they might propose this year?

Being like Sombke – an optimistic pessimist, a guy who hopes for the best and plans for the worst – may be the best approach when it comes to  thinking about what impact the 2012 state legislature could have on your business.