BROOKINGS When it comes to property taxes, Brookings is in the Goldilocks Zone, so to speak, where growth occurs every year, but not so much that it triggers caps a new law in South Dakota has put into place.
The law, which went into effect on July 1, caps property tax increases to no more than 3% a year, beginning with taxes payable in 2027 and continuing through 2031. Brookings Finance Director Ashley Rentschsaid the city has seen an average growth rate of 2.13% over the last decade, with the sole exception of 2022, when growth clocked in at 3.16%.
Otherwise, its been under 3% every year for the last 10 years, Rentsch said, adding that the freeze likely wouldnt have much of an effect on the city. It would most likely have a very immaterial impact on Brookings unless we started to see growth in excess of 3%.
She said similar-sized communities, such as Watertown and Aberdeen, are more or less facing the same circumstances as Brookings. Larger cities with their turbocharged growth rates, such as Sioux Falls and Rapid City, are not as fortunate so much so that Sioux Falls Mayor Paul TenHaken is proposing millions of dollars in spending cuts over the next three years, according to recent reporting from South Dakota Searchlight.
However, had the 3% property tax cap been in effect in 2022, it would have affected Brookings.
We would have lost out on $5,600 in property tax, which doesnt seem like a lot, but then it compounds each year, Rentsch said. … It could escalate quickly.
Thats especially true if the legislation had maintained its original 2% property tax growth cap, a number that Rentsch said was negotiated by lawmakers up to the now-law 3% cap. If it had remained at 2%, she said Brookings could have faced a $600,000 potential revenue shortfall over the five-year period from 2027 through 2031.
It didnt come to pass, so, From the citys perspective, were cautiously optimistic at this point because we havent really seen much growth over 3% each year, Rentsch concluded. Its not much of an impact at this point its just something we have to watch.
In South Dakota, property taxes help fund not only cities, but other entities as well. Per information from the city, a home valued at $350,000 in Brookings, and paying $4,765 in property taxes:
Brookings School District: $2,572 (53.98%)
Brookings County: $1,401 (29.40%)
City of Brookings: $792 (16.62%)
The city puts its property tax revenue into its general fund. In the current 2025 budget year, it totals 19.38% of the general funds revenue, accounting for $4,237,203. Other general fund sources include sales tax revenue, which Rentsch spoke to briefly as well, saying the city is still seeing some growth in sales taxes this year over what was recorded last year.
Its kind of cooled, I would say; in 2021 through 2023, sales tax was really booming with inflation. Inflation has kind of cooled and so weve seen kind of a slowing down in sales tax growth, she said. At this point, were about 1.5% over last year and just about 1% above our budget for this year, so pretty consistent with where were projected to be.
The general fund accounts for $21,860,776 of the citys overall budget of $73,169,780 in 2025. It provides money for functions such as policing, public works and parks, recreation and forestry.
Contact Mondell Keck at mondell.keck@
brookingsregister.com.
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