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Page 62

Competitive Assessment 56
October 2009

State and Local Tax Rates, 2008

Sources: Federation of Tax Administrators, the Tax Foundation, Sioux Falls Development Foundation, county
tax assessors’ websites

Many residents and leaders in the business community expressed satisfaction with the
competitiveness of local and state tax structures. The lack of personal and corporate income
taxes makes Greater Sioux Falls an attractive place to live and do business. Among online survey
respondents, low taxes were identified both as one of the area’s greatest strengths and one of
its top opportunities on which to capitalize. However, many feel that the state’s lack of diverse
and flexible incentives limits economic opportunities. There is a “lack of people willing to use
tax dollars to improve community,” said one online survey respondent. “Our tax structure limits
the amount of money we are able to invest in infrastructure.” Additionally, “financing of
education is in conflict with the tax climate.”

Provision of incentives has become a prominent component of economic
development strategies throughout the U.S. They can come in many different forms
and are typically presented as a variety of benefits offered by local and state
government to businesses they are hoping to lure to their communities. While some
types of incentives are seen as more effective than others, they have nonetheless
become an integral part of business and industry recruitment. They can also be used
to support small and existing businesses interested in growing locally.

Sales taxes in South Dakota are generally collected at the state level only and are the
state’s primary source of revenue; few counties and cities are granted state approval

South Dakota Iowa North Dakota Minnesota

Individual Income Tax None 0.36 ‐ 8.98% 2.1 ‐ 5.54% 5.35 ‐ 7.85%

Corporate Income Tax None 6.0 ‐ 12.0% 2.6 ‐ 6.5% 9.8%*

Sales Tax Exemptions None
Food and 

prescription drugs

Food and 

prescription drugs

Food, prescription, 

and non‐

prescription drugs

Average State/Local Tax Burden 

Per Capita
$3,079 $3,589 $3,637  $4,688

Tax Burden: Per Capita Income 

7.9% 9.3% 9.2% 10.2%

City/Local Sales Tax Rate Ranking 

(1=highest amount)
45 31 33 12

Commercial Property Taxes ‐ City 

(for a $1,000,000 property)
$20,274 $20,617 $22,952 $34,396

Residential Property Taxes ‐ City 

(for a $200,000 home)
$2,945 $4,123 $4,131 $2,714

Taxes as % of median home 

values‐ Statewide average
1.24% 1.24% 1.4% 0.94%

Rank (1=highest ratio of tax: 

value, statewide)
27 28 25 19

Page 63

Competitive Assessment 57
October 2009

to levy additional sales tax. At the state level, voters and ballot initiatives, rather than
government officials, play the primary role in the decision to increase local taxes to
raise revenue. Municipalities in the Sioux Falls Area may not raise taxes to pay for
improvement programs and projects; instead, residents may vote through
referendum on whether they are willing to opt out of the state-imposed tax levels and
funding to raise additional revenue.

Available local incentives and financing mechanisms include the following:

 Revolving Economic Development and Initiative Fund (REDI): The South
Dakota Governor’s Office of Economic Development provides the REDI Fund
to promote primary job growth in the state. This low interest loan fund is
available to start-ups, businesses that are expanding or relocating, and local
economic development corporations for up to 45 percent of project costs.
Companies must secure matching funds and be able to provide a 10 percent
minimum equity contribution. Eligible costs include the purchase of land and
associated site improvements; construction, acquisition, or renovation of
buildings; fees, services, and other costs associated with construction; and the
purchase and installation of machinery and equipment.

 MicroLOAN: This loan program is available to South Dakota small businesses
and residents and provides loan assistance for working capital, equipment,
real estate, or other fixed asset project costs.

 Bond Financing: Designed for more capital-intensive manufacturing projects,
this pooled loan program offered by the State of South Dakota provides small
businesses access to larger capital markets for tax-exempt or taxable bond
issuances. To lower the cost of issuance, projects can be pooled or they can be
funded individually. The borrowers are able to take advantage of the low
interest rates available as a result of the State’s “A” rating by Standard and

 South Dakota Workforce Development Program: This program by the
Governor’s Office of Economic Development provides grants to companies
for the training of both new and existing employees in hard skills, soft skills,
and basic academic skills.

 Property Tax Abatement: Ordinances in Minnehaha and Lincoln counties
allow forgiveness for a portion of property taxes for both new construction or
major additions and renovations to existing industrial and commercial
structures, resulting in a significant savings of property tax otherwise paid
during the first five to six years following construction.

 Southeast Development Foundation Regional Revolving Loan Fund:
The revolving loan fund offers assistance to individuals and businesses

Page 123

Competitive Assessment 117
October 2009

42. In your opinion, what is the area’s greatest strength?

43. What do you think is the area’s most important challenge to overcome?

People/friendliness/commitment to 


Cost of l iving/low taxes 34

Work ethic 26

Safety/low crime 22

Small  town feel/size 19

Cleanliness/natural  environment/beauty 18

Private sector leadership 17

Quality of l ife 16

Health care 15

Accessibil ity/location 13

Parks/bike trails/recreation 13

Amenities 11

Schools 7

Family‐friendly 7

Roads/infrastructure 3

Infrastructure/roads/traffic 48

Expanding job opportunties 42

Small  mindedness/fear of change 41

Low wages 29

Managing growth 27

Education 20

Housing options 20

Diversifying economic base 19

Socioeconomic issues 16

Diversity 18

Cost of l iving/taxes 17

Keeping young people and professionals 17

Amenities/entertainment 17

Public leadership 16

Climate 13

Crime 12

Funding projects  and public services 9

Location 6

Apathy  4

Perception 3

Page 124

Competitive Assessment 118
October 2009

44. What do you think is the area’s top opportunity to capitalize on?

45. Do you have any final comments on the Sioux Falls Area or this strategic

Selected comments:

 I hope this process will find a direction for SF to go as we face the
possibility of decreased employment in the credit card industry and
changes in the health care industry. We need to identify a new industry
which will grow alongside the existing ag, financial and health care such
as call centers, operations such as ADP, and improved long distance air
service, perhaps a hub for some airline. I hope we can begin to look at
some sort of light rail system from Vermillion, through Canton, to Sioux
Falls downtown and industrial park and on to the University Center and
Brookings. This could give us the capacity to handle well in excess of
500,000 souls in the southeast area of the state with a good public
transportation system to back up our existing road network.

 I have high hopes for Sioux Falls…and high expectations. I believe
anything can be done when we think, plan, and act as one.

 Keep looking to the future. Do rest on our laurels. Always challenge
ourselves to be better, while celebrating our strengths and quality of life.

 Think Big! Sioux Falls can become an even greater place if we do not limit
ourselves. Build off of strengths and step out of traditional norms to seek
new ways to grow and improve

 Being part of a small state gives us the advantage of having our state and
national legislators accessible to enact changes that may create
opportunities to grow and improve our community.

Health care 33

Business  climate 32

Event center 32

Low taxes 27

Workforce 20

Recreation/entertainment 20

Safety 12

Downtown 16

Location 11

Family friendly 9

Clean energy 5

Public and private sector leadership 5

Housing 3

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