Electric cooperatives in South Dakota want a change in tax law

SB123 graphicThis story requires a bit of a history lesson.

In the late 1930s, the South Dakota Legislature adopted a centrally assessed property tax for taxing both investor-owned electric utilities and cooperative electric utilities.

But cooperative electric utilities had so much more investment per meter to deliver power to their members. The rural electric cooperatives strung power line miles and miles in some cases for a single home, while investor-owned utilities served mostly towns, in which each mile of line had many, many homes and businesses.

Because the electric cooperatives had so much more investment, the South Dakota legislature reassessed their earlier decision (from the 1930s), and in 1941, adopted a gross receipts tax for electric cooperatives. Their motive was simple and clear: to establish equity in the way the investor-owned utilities and electric cooperatives were taxed.

This worked well for decades. But with the price of wholesale power rising due to many factors, this system is becoming less and less fair. In fact, the amount of taxes electric cooperatives pay has doubled in the last 10 years, and will double again in the next 10 years.

That’s why electric cooperatives support a new way of paying taxes. It’s SB 123.

The gross receipts taxes the cooperatives pay go directly to school districts in South Dakota. Electric cooperatives have supported this, and still do.

The South Dakota Senate passed the bill Jan. 31. Next, it moves on to the South Dakota House. On Feb. 22, SB 123 is scheduled for a hearing.

If you’re a South Dakotan, email your legislator to tell them why you support SB 123.

Steve Tomac, Basin Electric senior legislative representative, explains the bill in the video.

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