Changes to Existing Law

26.800.18 26.800.19 101st Legislative Session 1245 2026 South Dakota Legislature House Bill 1245 HOUSE LOCAL GOVERNMENT ENGROSSED Introduced by: Representative Jamison Underscores indicate new language. Overstrikes indicate deleted language. An Act to authorize municipalities to establish a local funding mechanism for capital 1 improvement projects. 2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 3 Section 1. That a NEW SECTION be added to chapter 9-12: 4 A municipality shall appoint a capital improvement board for purposes of approving 5 or rejecting ordinances pursuant to section 4 of this Act. 6 A capital improvement board consists of the following five members, appointed by 7 the mayor of the municipality and approved by the governing body: 8 (1) One member of the governing body of the municipality; and 9 (2) Four residents of the municipality, excluding any member of the governing body of 10 the municipality. 11 Section 2. That a NEW SECTION be added to chapter 9-12: 12 The term of each member appointed pursuant to section 1 of this Act is three years. 13 In the case of a vacancy, a new member may be appointed for the remainder of the term, 14 in accordance with section 1 of this Act. 15 Each term begins on the January first or July first following the appointment, 16 whichever occurs first. 17 Section 3. That a NEW SECTION be added to chapter 10-52: 18 In addition to any other tax imposed by a municipality under this chapter, a 19 municipality may impose a gross receipts tax, subject to the provisions of sections 4, 5, 20 8, and 9 of this Act. 21 The rate of tax authorized by this section may not exceed one percent on the gross 22 receipts of all sales of tangible personal property and services and products transferred 23 electronically that are taxable pursuant 23 26.800.18 to chapter 10-45 in the municipality. The tax must 24 26.800.19 2 1245 Underscores indicate new language. Overstrikes indicate deleted language. to chapter 10-45 in the municipality. The tax must conform in all respects to the state tax 1 under chapter 10-45, chapters 10-45 and 10-46, with the 1 exception of the tax rate. 2 Section 4. That a NEW SECTION be added to chapter 10-52: 3 To impose a tax pursuant to section 3 of this Act, the governing body of a 4 municipality shall specify in the ordinance the purpose of, and the minimum amount to be 5 generated from, the tax. The governing body shall submit the ordinance to the capital 6 improvement board of the municipality, established pursuant to section 1 of this Act. 7 If the capital improvement board, by a majority vote, approves the ordinance, the 8 governing body must submit the question of the imposition of the tax to the voters of the 9 municipality at the next regular or special election of the municipality. 10 Section 5. That a NEW SECTION be added to chapter 10-52: 11 To the extent applicable, the administration and notification of an election for the 12 imposition of a tax pursuant to section 3 of this Act must adhere to the provisions of §§ 6-13 8B-4 and 6-8B-5 governing a bond election. 14 The tax may only be imposed if it is supported by at least sixty percent of the 15 voters of the municipality voting on the question. 16 Section 6. That a NEW SECTION be added to chapter 10-52: 17 All moneys collected from the tax imposed pursuant to section 3 of this Act and 18 distributed to a municipality must be deposited into a special capital outlay fund of the 19 municipality to be used only for purposes set forth in section 7 of this Act. 20 Section 7. That a NEW SECTION be added to chapter 10-52: 21 The governing body of a municipality may expend moneys in the special capital 22 outlay fund only for the following purposes: 23 (1) Acquisition or lease, by the municipality, of real property, a plant asset, or 24 equipment; or 25 (2) Construction, repair, or renovation of real property owned solely by the 26 municipality or jointly by the municipality with one or more political subdivisions of 27 this state. 28 After the completion of a project using moneys in the special capital outlay fund, 29 the municipality may transfer ownership of the real property, plant, or equipment to a 30 26.800.18 26.800.19 3 1245 Underscores indicate new language. Overstrikes indicate deleted language. county in which the municipality is at least partially situated or to a school district in which 1 the municipality is at least partially situated. 2 Section 8. That a NEW SECTION be added to chapter 10-52: 3 Subject to the notification requirements provided in § 10-52-9, an ordinance 4 enacted pursuant to sections 3 to 5, inclusive, of this Act, and any tax rate affected 5 thereby, remain effective until the last day of a calendar quarter, occurring on the earlier 6 of: 7 (1) Sixty months after the enactment of the ordinance; or 8 (2) June thirtieth or December thirty-first of the year in which the municipality collects 9 the minimum amount of money specified in the ordinance, pursuant to section 4 10 of this Act. 11 Section 9. That a NEW SECTION be added to chapter 10-52: 12 A municipality may not impose a tax pursuant to section 3 of this Act if the 13 municipality has, in the most recent twenty-four months, collected moneys from a tax 14 imposed pursuant to section 3 of this Act. 15

26.800.19 26.800.20 101st Legislative Session 1245 2026 South Dakota Legislature House Bill 1245 HOUSE LOCAL GOVERNMENT ENGROSSED Introduced by: Representative Jamison Underscores indicate new language. Overstrikes indicate deleted language. An Act to authorize municipalities to establish a local funding mechanism for capital 1 improvement projects. 2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 3 Section 1. That a NEW SECTION be added to chapter 9-12: 4 A municipality shall appoint a capital improvement board for purposes of approving 5 or rejecting ordinances pursuant to section 4 of this Act. 6 A capital improvement board consists of the following five members, appointed by 7 the mayor of the municipality and approved by the governing body: 8 (1) One member of the governing body of the municipality; and 9 (2) Four residents of the municipality, excluding any member of the governing body of 10 the municipality. 11 Section 2. That a NEW SECTION be added to chapter 9-12: 12 The term of each member appointed pursuant to section 1 of this Act is three years. 13 In the case of a vacancy, a new member may be appointed for the remainder of the term, 14 in accordance with section 1 of this Act. 15 Each term begins on the January first or July first following the appointment, 16 whichever occurs first. 17 Section 3. That a NEW SECTION be added to chapter 10-52: 18 In addition to any other tax imposed by a municipality under this chapter, a 19 municipality may impose a gross receipts tax, subject to the provisions of sections 4, 5, 20 8, and 9 of this Act. 21 The rate of tax authorized by this section may not exceed one percent on the gross and must 22 receipts of all sales of tangible personal property and services and products transferred 23 electronically that are taxable pursuant to chapter 10-45 in the municipality. The tax must 24 26.800.19 2 1245 Underscores indicate new language. Overstrikes indicate deleted language. conform in all respects to the state tax under chapters 10-45 and 10-46, with the 1 23 exception of the tax rate. 24 26.800.20 2 1245 Underscores indicate new language. Overstrikes indicate deleted language. Section 4. That a NEW SECTION be added to chapter 10-52: 3 1 To impose a tax pursuant to section 3 of this Act, the governing body of a 4 2 municipality shall specify in the ordinance the purpose of, and the minimum amount to be 5 3 generated from, the tax. The governing body shall submit the ordinance to the capital 6 4 improvement board of the municipality, established pursuant to section 1 of this Act. 7 5 If the capital improvement board, by a majority vote, approves the ordinance, the 8 6 governing body must submit the question of the imposition of the tax to the voters of the 9 7 municipality at the next regular or special election of the municipality. 10 8 Section 5. That a NEW SECTION be added to chapter 10-52: 11 9 To the extent applicable, the administration and notification of an election for the 12 10 imposition of a tax pursuant to section 3 of this Act must adhere to the provisions of §§ 6-13 6-11 8B-4 and 6-8B-5 governing a bond election. 14 12 The tax may only be imposed if it is supported by at least sixty percent of the 15 13 voters of the municipality voting on the question. 16 14 Section 6. That a NEW SECTION be added to chapter 10-52: 17 15 All moneys collected from the tax imposed pursuant to section 3 of this Act and 18 16 distributed to a municipality must be deposited into a special capital outlay fund of the 19 17 municipality to be used only for purposes set forth in section 7 of this Act. 20 18 Section 7. That a NEW SECTION be added to chapter 10-52: 21 19 The governing body of a municipality may expend moneys in the special capital 22 20 outlay fund only for the following purposes: 23 21 (1) Acquisition or lease, by the municipality, of real property, a plant asset, or 24 22 equipment; or 25 23 (2) Construction, repair, or renovation of real property owned solely by the 26 24 municipality or jointly by the municipality with one or more political subdivisions of 27 25 this state. 28 26 After the completion of a project using moneys in the special capital outlay fund, 29 27 the municipality may transfer ownership of the real property, plant, or equipment to a 30 26.800.19 3 1245 Underscores indicate new language. Overstrikes indicate deleted language. 28 county in which the municipality is at least partially situated or to a school district in which 1 29 the municipality is at least partially situated. 2 30 26.800.20 3 1245 Underscores indicate new language. Overstrikes indicate deleted language. Section 8. That a NEW SECTION be added to chapter 10-52: 3 1 Subject to the notification requirements provided in § 10-52-9, an ordinance 4 2 enacted pursuant to sections 3 to 5, inclusive, of this Act, and any tax rate affected 5 3 thereby, remain effective until the last day of a calendar quarter, quarter that is at least ninety 4 days after notification by the municipality to the secretary of revenue, and occurring on 5 the earlier of: 6 of: 7 (1) Sixty months after the enactment of the ordinance; or 8 7 (2) June thirtieth or December thirty-first of the year in which the municipality collects 9 8 the minimum amount of money specified in the ordinance, pursuant to section 4 10 9 of this Act. 11 10 Section 9. That a NEW SECTION be added to chapter 10-52: 12 11 A municipality may not impose a tax pursuant to section 3 of this Act if the 13 12 municipality has, in the most recent twenty-four months, collected moneys from a tax 14 13 imposed pursuant to section 3 of this Act. 15 14

26.800.20 26.800.21 101st Legislative Session 1245 2026 South Dakota Legislature House Bill 1245 HOUSE ENGROSSED Introduced by: Representative Jamison Underscores indicate new language. Overstrikes indicate deleted language. ENROLLED AN ACT ENTITLED An Act to authorize municipalities to establish a local funding mechanism for capital 1 improvement projects. 2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 3 Section 1. That a NEW SECTION be added to chapter 9-12: 4 A municipality shall appoint a capital improvement board for purposes of approving 5 or rejecting ordinances pursuant to section 4 of this Act. 6 A capital improvement board consists of the following five members, appointed by 7 the mayor of the municipality and approved by the governing body: 8 (1) One member of the governing body of the municipality; and 9 (2) Four residents of the municipality, excluding any member of the governing body of 10 the municipality. 11 Section 2. That a NEW SECTION be added to chapter 9-12: 12 The term of each member appointed pursuant to section 1 of this Act is three years. 13 In the case of a vacancy, a new member may be appointed for the remainder of the term, 14 in accordance with section 1 of this Act. 15 Each term begins on the January first or July first following the appointment, 16 whichever occurs first. 17 Section 3. That a NEW SECTION be added to chapter 10-52: 18 In addition to any other tax imposed by a municipality under this chapter, a 19 municipality may impose a gross receipts tax, subject to the provisions of sections 4, 5, 20 8, and 9 of this Act. 21 The rate of tax authorized by this section may not exceed one percent and must 22 conform in all respects to the state tax under chapters 10-45 and 10-46, with the 23 exception of the tax rate. 24 26.800.20 26.800.21 2 1245 Underscores indicate new language. Overstrikes indicate deleted language. HB1245 ENROLLED Section 4. That a NEW SECTION be added to chapter 10-52: 1 To impose a tax pursuant to section 3 of this Act, the governing body of a 2 municipality shall specify in the ordinance the purpose of, and the minimum amount to be 3 generated from, the tax. The governing body shall submit the ordinance to the capital 4 improvement board of the municipality, established pursuant to section 1 of this Act. 5 If the capital improvement board, by a majority vote, approves the ordinance, the 6 governing body must submit the question of the imposition of the tax to the voters of the 7 municipality at the next regular or special election of the municipality. 8 Section 5. That a NEW SECTION be added to chapter 10-52: 9 To the extent applicable, the administration and notification of an election for the 10 imposition of a tax pursuant to section 3 of this Act must adhere to the provisions of §§ 6-11 8B-4 6-8B-4 and 6-8B-5 governing a bond election. 12 The tax may only be imposed if it is supported by at least sixty percent of the 13 voters of the municipality voting on the question. 14 Section 6. That a NEW SECTION be added to chapter 10-52: 15 All moneys collected from the tax imposed pursuant to section 3 of this Act and 16 distributed to a municipality must be deposited into a special capital outlay fund of the 17 municipality to be used only for purposes set forth in section 7 of this Act. 18 Section 7. That a NEW SECTION be added to chapter 10-52: 19 The governing body of a municipality may expend moneys in the special capital 20 outlay fund only for the following purposes: 21 (1) Acquisition or lease, by the municipality, of real property, a plant asset, or 22 equipment; or 23 (2) Construction, repair, or renovation of real property owned solely by the 24 municipality or jointly by the municipality with one or more political subdivisions of 25 this state. 26 After the completion of a project using moneys in the special capital outlay fund, 27 the municipality may transfer ownership of the real property, plant, or equipment to a 28 county in which the municipality is at least partially situated or to a school district in which 29 the municipality is at least partially situated. 30 26.800.20 26.800.21 3 1245 Underscores indicate new language. Overstrikes indicate deleted language. HB1245 ENROLLED Section 8. That a NEW SECTION be added to chapter 10-52: 1 Subject to the notification requirements provided in § 10-52-9, an ordinance 2 enacted pursuant to sections 3 to 5, inclusive, of this Act, and any tax rate affected 3 thereby, remain effective until the last day of a calendar quarter that is at least ninety 4 days after notification by the municipality to the secretary of revenue, and occurring on 5 the earlier of: 6 (1) Sixty months after the enactment of the ordinance; or 7 (2) June thirtieth or December thirty-first of the year in which the municipality collects 8 the minimum amount of money specified in the ordinance, pursuant to section 4 9 of this Act. 10 Section 9. That a NEW SECTION be added to chapter 10-52: 11 A municipality may not impose a tax pursuant to section 3 of this Act if the 12 municipality has, in the most recent twenty-four months, collected moneys from a tax 13 imposed pursuant to section 3 of this Act. 14 26.800.21 4 1245 HB1245 ENROLLED An Act to authorize municipalities to establish a local funding mechanism for capital improvement projects. I certify that the attached Act originated in the: House as Bill No. 1245 Chief Clerk of the House Speaker of the House Attest: Chief Clerk of the House President of the Senate Attest: Secretary of the Senate House Bill No. 1245 File No. ____ Chapter No. ______ Received at this Executive Office this _____ day of _____________, 2026 at ____________M. By for the Governor The attached Act is hereby approved this ________ day of ______________, A.D., 2026 Governor STATE OF SOUTH DAKOTA, ss. Office of the Secretary of State Filed ____________, 2026 at _________ o'clock __M. Secretary of State By Asst. Secretary of State