How South Dakota's Department of Revenue Property Tax Oversight Modernized Property Tax Assessments with GIS

The US state of South Dakota boasts a rich tapestry of history and landmarks; ranging from the birthplace of Hubert Humphrey to the iconic Mount Rushmore National Monument to the infamous town of Deadwood, immortalized by "Wild Bill" Hickok's demise. Yet, amid its well-known attractions, South Dakota holds another distinction: a pioneering role in property tax fairness. 

The South Dakota Department of Revenue (SD DOR) has implemented one of the most advanced property tax oversight systems in the nation using geographic information system (GIS) technology. The GIS-based property tax oversight system is an innovative approach that ensures impartial and fair property tax assessments. This system streamlines operations, saving countless hours of staff time and enhancing support for the state's 66 counties.

Most state departments of revenue seek to achieve property tax equity by equalizing taxes across various jurisdictions. This ensures a degree of fairness and uniformity statewide. This process involves conducting detailed analyses of property tax rates and sales ratios (assessed value divided by sales price) to ensure that they comply with state codes in each assessment jurisdiction.

Managing these complex tasks (including mathematical calculations) involves aggregating, normalizing, and analyzing vast amounts of data from different taxing jurisdictions. Each jurisdiction utilizes its own computer-assisted mass appraisal (CAMA) and tax administration software systems.

Despite SD DOR meeting statutory requirements, inefficiencies persisted with several counties employing multiple systems to accomplish similar objectives. With 2,600 taxing districts, 800,000 tax records, and a population exceeding 900,000, the SD DOR faced a monumental challenge. Historically, the department lacked comprehensive aggregated official property data at the state level and relied solely on manual records and cumbersome spreadsheets, leading to incomplete and conflicting information.

SD DOR staff recognized the need for a complete and accurate view of their data, which could help them grasp the spatial relationships among jurisdictions, properties, and infrastructure, as well as understand special tax districts, agricultural land, and local adjustments. Department staff set out to enhance, improve, grow, and automate many of its oversight capabilities.

The arduous task of gathering the extensive property data required for oversight was previously a manual process, prone to errors and consuming significant staff time. Developing custom-built systems posed challenges due to their high costs, maintenance complexities, and technology's rapid evolution. Predicting future obsolescence, the SD DOR wanted a modern solution made for state revenue departments and property tax oversight. Their goal was to use cloud-based technology for efficient governance.

To build a system that would align with their core requirements and provide a clean slate, SD DOR staff determined that ArcGIS Enterprise was the best choice to proceed with. The software system offered advantages including streamlined workflows, innovative data analysis methods, advanced visualization capabilities, and options for sharing data both internally and externally with counties and the public. Leveraging an enterprise agreement (EA) with Esri, SD DOR harnessed GIS technology to configure a system tailored to their specific needs, avoiding costly customization.

Esri partner Catalis and SD DOR teamed up to launch the Property Tax Modernization Project. This was a comprehensive, phased project strategy aimed at enhancing the efficiency and effectiveness of property tax administration statewide. Catalis's Property Tax Oversight solution helped SD DOR establish a cloud-based platform that was accessible to state property tax administrators, significantly streamlining their operational workflows. Catalis played a pivotal role in fostering collaboration among all stakeholders, a critical factor in the project's success.

This multifaceted endeavor has enabled SD DOR to transition to a fully electronic filing system. The system operates through an extract, transform, and load (ETL) process using Microsoft SQL Server to ingest, aggregate, and standardize county data. Information is seamlessly served to users with ArcGIS, ensuring efficient and accessible property tax oversight and other capabilities. Additionally, staff aggregated parcel data from 66 counties using the desktop GIS application ArcGIS Pro.

As part of the project, SD DOR also used ArcGIS Enterprise software's Map Viewer feature to create the Sales Tax Rate Lookup tool, which provides users with more comprehensive and accurate information about tax rates.

The integration of GIS has not only benefited SD DOR but has also brought positive impacts across the entire state. By having access to easily interpretable and immediate data, the department has experienced faster turnaround times and quicker validation of assessment reports and tax levy approval. 

"More time is being spent on assisting the counties. The time savings of the new system will also be reflected in our response time to legislative and public inquiries," said Wendy Semmler, SD DOR's property tax director. "We can now better keep current on trends, attend educational events, and provide more one-on-one training to our stakeholders."

SD DOR's work on the Property Tax Modernization Project earned recognition with a Special Achievement in GIS Award at Esri's User Conference in 2023. This accolade from Esri spotlights projects demonstrating vision, leadership, diligence, and innovation in leveraging Esri's GIS technology.