PIERRE, S.D. (SDBA) — A proposal to eliminate property taxes for homeowners while raising the state sales tax failed Monday in the South Dakota House of Representatives.

The House amended Senate Bill 169 to remove the requirement for public hearings on excess tax levies. Instead, it would have eliminated property taxes on owner-occupied homes for school district general and special education funds while raising the state sales tax from 4.2 percent to 5 percent.

“This is the year to cut property taxes,” said Rep. Tim Goodwin, R-Rapid City. “Our proposal cuts property taxes 35 percent to every owner-occupied homeowner that includes ranchers, farmers and city dwellers.”

The House voted 35-34 to adopt the amendment, but the final bill failed 27-42, far short of the two-thirds majority needed because it increased taxes.

According to figures presented by amendment supporters, the tax cut would have saved homeowners about $417 per $100,000 of assessed value v.

“If this amendment passes and the bill passes, you will be able to go back and tell your constituents exactly what to expect for tax relief to their homes,” said Rep. Kathy Rice, R-Black Hawk. “Four hundred sixteen dollars for $100,000 evaluation.”

Critics argued the bill would hurt agriculture, the state’s largest industry, by increasing taxes on farm equipment.

“If you want to talk about a property tax cut bill that’s going to shift on to ag, let me introduce you to this amendment,” said Rep. Marty Overweg, R-New Holland. “This will hurt agriculture.”

Other opponents worried about the impact on lower-income residents who rent rather than own homes.

“The people with the money are the ones who are going to benefit,” said Rep. Bobbi Andera, R-Sioux Falls. “The people who are struggling are not. In fact, it’s going to burden them even more.”

“This is a $240 million tax increase in the state of South Dakota,” said Rep. Leslie Heinemann, R-Flandreau. “You will be voting for potentially the largest increase in tax in South Dakota history if you vote for this.”

“I can’t imagine anybody in this room disagrees with that fact,” said Rep. John Hughes, R-Sioux Falls. “The statistics are obvious. People in the lower income brackets pay a higher percentage in a consumption tax.”

Two other property tax measures remain on the Senate’s calendar for today: SB 191, which would limit the annual valuation increases on owner-occupied homes, and SB 216, which would reduce the growth in the assessed value of owner-occupied properties.

The legislature has only four days remaining in the regular session to complete action on major bills.