Document Type

Thesis - Open Access

Award Date


Degree Name

Master of Science (MS)

Department / School


First Advisor

Mark Edelman


In 1978, after years of considerable pressure for tax relief, the South Dakota Legislature repealed the personal property tax. The repeal took place in two stages. In 1979 the tax on household goods, personal effects, appliances, sporting and hobby goods, pets, grain and seed, and honey and sugar beets was repealed. The remainder was repealed in 1980. Personal property tax collections in 1977 accounted for approximately 20.2% of total property tax collections in South Dakota. Because the personal property tax was a significant portion of local government revenues, there was no question at the time that the repeal of the tax would impact revenues of local governmental units. In order to take pressure off local units of governments, the South Dakota Legislature created a "tax allocation fund". The fund set aside state revenues to be used to replace local personal property tax revenues after the repeal. In 1981 the "tax allocation fund" was repealed, but the Legislature has continued to provide personal property tax replacement moneys by using state general funds. The current formula for distributing the replacement funds to the counties is based on the higher amount of 1978 personal property tax payable or ninety-five percent of the 1973-1977 payable average. Each year this criteria for distribution becomes more antiquated for two basic reasons: (1) it does not take growth and decline of local taxing units into account, and (2) real property tax collections have continued to increase while personal property tax replacement has been held constant, so the replacement revenue is a declining share of total local revenue. As a result of these trends, the personal property tax replacement formula will likely be a continuing concern of state and local officials. Therefore, there is a need to gather and analyze information that would increase the understanding of the personal property replacement distribution problem and the choices available to state and local officials. The purpose of this thesis is to analyze the economic consequences of employing alternative criteria for distributing such tax replacement money to local government units in South Dakota.

Library of Congress Subject Headings

Taxation of personal property -- South Dakota
Revenue sharing -- South Dakota
Local finance -- South Dakota



Number of Pages



South Dakota State University


No Copyright - United State