Codington County Ordinance 83 Debate: Supporters, Opponents Clash Over Half-Cent Sales Tax for Property Tax Relief
Northeast Radio SD News – Watertown, SD - The second half of Wednesday night's ballot forum at Lake Area Technical College turned local, as panelists and audience members debated Codington County Ordinance 83—a referred measure that would impose a half-cent countywide gross receipts and use tax to fund owner-occupied property tax credits.
District 5 State Sen. Glen Vilhauer of Watertown moderated the discussion, which featured proponent Nathan "Nate" Graf and opponent Watertown Ward D Councilman Doug Allen; however, he said at the beginning that he is present as a citizen, not a Councilman.
(Voters can review the full text of the referred measure on the Codington County Official Website and find statewide voter resources through the South Dakota Secretary of State Election Portal. Northeast Radio SD has prior local coverage of the commission's 4-1 vote and the citizen referendum petition.)
How Ordinance 83 Originated Under Senate Bill 96
Vilhauer opened the panel by explaining that Ordinance 83 stems from Senate Bill 96, legislation passed during the 2026 legislative Session and signed by Gov. Larry Rhoden in response to statewide frustration over rising property taxes. Under the law, counties could enact a 0.5 percent county sales and use tax, with proceeds going into a dedicated fund to pay down the county share of owner-occupied property taxes.
Counties could adopt the tax by commission vote or refer it directly to voters; the Codington County Commission voted 4-1 to pass Ordinance 83, after which local citizens gathered enough petition signatures to put the ordinance on the general election ballot.
According to Graf, eight South Dakota counties passed the tax this year, and six of those—including Codington and Brown counties—are appearing on the ballot for a public vote, while Brookings County declined to adopt the measure.
The Case for Ordinance 83: Offsetting $5.4 Million in Property Taxes
Speaking in favor of Ordinance 83, Graf cited statistics provided by the South Dakota Department of Revenue showing that the county portion of owner-occupied property taxes in Codington County totals $5,429,963.
Graf noted that the state projects adding a half-cent sales tax—50 cents on a $100 purchase—would generate roughly $6.1 million annually in Codington County, filling 113 percent of the owner-occupied property tax reduction pot. Under Senate Bill 96, once the county offsets 100 percent of its owner-occupied property tax share, the remaining 13 percent of collections must spill over to reduce agricultural and commercial property taxes.
"So in my yes vote, yes on 83 is if you're a homeowner in Codington County, if you're an ag owner, if you own farmland, or if you're a commercial business owner, yes on 83 saves you a lot of money," Graf said.
When asked by Vilhauer what the measure would mean for a typical household, Graf stated that based on the state's average Codington County home valuation of $325,000, the credit was initially estimated at $821 per year under the 2025 mill levy of 2.525, and around $1,000 per year under the updated mill levy of 3.081. Graf also emphasized that Codington County serves a regional trade area of roughly 100,000 people despite having a county population of about 28,000.
"Sixty percent of our sales tax is paid by out-of-county shoppers," Graf said. "Those people will help pay for that reduction."
Graf added that lowering monthly escrow payments by $60 to $80 could help more renters qualify to become homeowners, offset the property tax impact of the Codington County jail bond passed two years ago, and provide critical relief to seniors living on fixed incomes.
"In my family budget, if I spend $2,000 a month and I pay an extra $120 a year, and I save $1,000, that's $900 more dollars in my pocket," Graf said. "So that's why I vote yes on 83."
The Case Against Ordinance 83: A Regressive Tax Shift
Allen urged voters to reject Ordinance 83, arguing that the measure is fundamentally unfair because every resident and shopper pays the higher sales tax while only property owners receive the tax credit.
"Everyone will pay this tax and the only people who will benefit are owner-occupied homes, people that own homes," Allen said. "So if you don't own a home, you're not going to benefit."
Allen characterized the ordinance as a "tax shift, not a reduction," contending that it does nothing to reform South Dakota's underlying property valuation and tax formula, which taxes homes at 85 percent of assessed value.
"In other words, the property tax amount remains the same," Allen said. "We haven't lowered it or done anything to it. We've just taken money from another pot of sales tax and we put it in for property tax reduction."
Allen also pointed out that South Dakota homeowners are already slated to receive what the governor has called the largest property tax reduction in state history regardless of whether Ordinance 83 passes. He noted that the Legislature set aside roughly $55.9 million in state surplus funds and committed the revenue from the state sales tax returning from 4.2 percent to 4.5 percent—estimated by state officials at $114 million to $117 million—to provide a projected $170 million in statewide property tax relief, or roughly $528 on a $325,000 home.
Adding a local sales tax increase on top of rising everyday living costs, Allen argued, places a regressive burden on lower-income residents and renters, including his own two sons—both full-time working veterans saving to buy homes in Watertown. Allen cited national cost increases averaging $222 more per year for electricity, $758 more for gas, $211 more for groceries, $929 more for health care, $256 more for rent, and $852 more for child care—totaling more than $3,200 in added household expenses before factoring in higher mortgage interest rates near 7.6 percent.
"Why should non-homeowners pay a tax increase to reduce the rate for homeowners?" Allen asked. "It's just patently not fair. It's not beneficial to all concerned."
Graf countered that rising household costs are exactly why homeowners need property tax relief.
"You just stated all those national figures and proved my point that you need to vote yes on 83 to lower your property tax so you have an expendable income to pay for all those increases," Graf replied.
Audience Questions: Renters, Small Businesses, and Retail Competition
During the public question-and-answer period, residents raised questions about county spending, how the tax affects service businesses and apartment renters, and whether raising the local tax rate from 6.5 percent to 7 percent would push shoppers to neighboring towns like Brookings.
When pressed on what he tells renters who ask why they should pay higher sales taxes to lower someone else's property taxes, Graf acknowledged the trade-off.
"What I would tell the renter that's going to pay a little extra sales tax is that a high tide raises all ships," Graf said. "I think this is better for the county. I think it's a good policy. I think this is a tool that the Legislature gave the counties to lower property tax."
An audience member, a local small business owner with clients across South Dakota, confirmed to the panel that she would have to charge her clients the extra 0.5 percent tax on applicable services, bringing additional out-of-county revenue into Codington County.
Another audience member questioned whether multifamily apartment buildings would receive spillover commercial tax relief that could help renters, and warned that Codington County shoppers might travel south to Brookings—where the tax rate remains 6 percent—leaving a gap in projected revenue.
"It's a realistic situation, but in my opinion, I'm not driving to Brookings to go to Hy-Vee for 50 cents on $100," Graf responded.
Allen maintained that trading predictable property tax collections for a volatile sales tax carries risks when residents already travel to Brookings or Sioux Falls to shop. He also argued the state should examine other revenue avenues—such as agricultural land productivity formulas or South Dakota's $900 billion trust industry—rather than adding another sales tax.
Vilhauer noted that the debate in the room mirrored the exact arguments lawmakers heard in Pierre when considering Senate Bill 96.
"I think if you were to ask the governor, would he say this is a perfect solution? I think he would say absolutely not," Vilhauer said. "It was something that was proposed that had some merits, and that's why I did support it out there at the time. But you're never going to find a perfect solution for the issue that we've got."
Closing Remarks
In his closing statement, Allen thanked the citizens who circulated petitions to put Ordinance 83 on the ballot so voters could make the final decision.
"Obviously, it's going to be a choice of the voters, and I'm personally glad that it's on the ballot and thank everybody who signed up to make sure that it got there, because I think tax increases should be on a ballot," Allen said.
Graf closed by thanking the Watertown Area Chamber of Commerce and reiterating his call for property owners to support the measure.
"My pitch to Ordinance 83 is that if you are a homeowner and you're a farmer that owns ag land and you're a commercial business owner that owns commercial property, 83 is the easiest yes vote you're going to make," Graf said.
Vilhauer thanked Lake Area Technical College and the chamber for hosting the forum on short notice and encouraged residents to review their sample ballots and vote down the ballot.
