reduce the sales and use tax rates on food, to increase the rates for certain taxes, use taxes, and excise taxes, and to provide a new fund for school district capital outlay projects.

26.597.27 101st Legislative Session 1281

2026 South Dakota Legislature
House Bill 1281

Introduced by: Representative Muckey

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An Act to reduce the sales and use tax rates on food, to increase the rates for certain 1
taxes, use taxes, and excise taxes, and to provide a new fund for school 2
district capital outlay projects. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 4
Section 1. That § 10-45-1 be AMENDED: 5
10-45-1. Terms used in this chapter mean: 6
(1) "Agricultural purposes," the producing, raising, growing, or harvesting of food or 7
fiber upon agricultural land, including dairy products, livestock, and crops. The 8
services of custom harvesters, chemical applicators, fertilizer spreaders, hay 9
grinders, and cultivators are considered agricultural purposes. The harvesting of 10
timber on land within the state is considered an agricultural purpose; 11
(2) "Business," any activity engaged in by any person or caused to be engaged in by 12
such person with the object of gain, benefit, or advantage, either direct or indirect; 13
(3) "Candy," any preparation of sugar, honey, or other natural or artificial sweeteners 14
in combination with chocolate, fruits, nuts or other ingredients or flavorings in the 15
form of bars, drops, or pieces. The term, candy, does not include any preparation 16
containing flour and does not require refrigeration; 17
(4) "Delivery charges," charges by the retailer for preparation and delivery to a location 18
designated by the purchaser of tangible personal property, any product transferred 19
electronically, or services including transportation, shipping, postage, handling, 20
crating, and packing. The term does not include postage for direct mail; 21
(5) "Food" and "food ingredient," any substance, whether in liquid, concentrated, solid, 22
frozen, dried, or dehydrated form, that is sold for ingestion or chewing by humans 23
and is consumed for its taste or nutritional value. The term, food, does These terms 24
do not include alcoholic beverages, tobacco, or prepared food: 25
(a) Alcoholic beverages, as defined in § 35-1-1; 26
26.597.27 2 1281
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(b) Cannabis or cannabis products, as defined in § 34-20G-1; 1
(c) Cigarettes, as defined in § 10-50B-4; 2
(d) Prepared food; or 3
(e) Tobacco products, as defined in § 10-50-1; 4
(6) Repealed by SL 2007, ch 56, § 1. 5
(7)(4) "Person," any individual, firm, copartnership, joint adventure, association, limited 6
liability company, corporation, municipal corporation, estate, trust, business trust, 7
receiver, the State of South Dakota and its political subdivisions, or any group or 8
combination acting as a unit; 9
(8)(5) "Prepared food," any food: 10
(a) Food sold in a heated state or heated by the seller; two 11
(b) Two or more food ingredients mixed or combined by the seller for sale as a 12
single item; or food 13
(c) Food sold with eating utensils provided by the seller, including plates, 14
knives, forks, spoons, glasses, cups, napkins, or straws. A, but a plate does 15
not include a container or packaging used to transport the food. 16
Prepared food does not include food that is only cut, repackaged, or pasteurized 17
by the seller, and eggs, fish, meat, poultry, and foods containing these raw animal 18
foods requiring cooking by the consumer as recommended by the Food and Drug 19
Administration in chapter 3, part 401.11 of its Food Code as of January 1, 2003, 20
so as to prevent food borne illnesses; 21
(8A)(6) "Product transferred electronically," any product obtained by the purchaser by 22
means other than tangible storage media. A product transferred electronically does 23
not include any intangible such as a patent, stock, bond, goodwill, trademark, 24
franchise, or copyright.; 25
(9)(7) "Relief agency," the state, and county, municipality or district thereof, or any 26
agency engaged in actual relief work; 27
(10)(8) "Retail sale" or "sale at retail," any sale, lease, or rental for any purpose other 28
than for resale, sublease, or subrent; 29
(11)(9) "Retailer," any person engaged in the business of selling tangible: 30
(a) Tangible goods, wares, or merchandise at retail, or the furnishing of gas; 31
(b) Gas, electricity, water, and communication service, and tickets; 32
(c) Tickets or admissions to places of amusement and athletic events as 33
provided in this chapter, and the sale at retail of products; and 34
(d) Products transferred electronically at retail. 35
26.597.27 3 1281
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The term also includes does not include any person subject to the tax imposed by 1
§§ 10-45-4 and 10-45-5. The that engages in the isolated or occasional sale of tangible 2
personal property or of any product transferred electronically at retail by a, provided the 3
person who does not hold himself or herself itself out to the public as engaging in the 4
business of selling such tangible personal property or products transferred electronically 5
at retail does not constitute such person a retailer; 6
(12)(10) "Sale," any transfer, exchange, or barter, conditional or otherwise, in any 7
manner or by any means whatsoever, for a consideration; and 8
(13) "Soft drinks," any nonalcoholic beverages that contain natural or artificial 9
sweeteners. The term, soft drinks, does not include any beverage that contains 10
milk or milk products, soy, rice of similar milk substitutes, or greater than fifty 11
percent of vegetable or fruit juice by volume; 12
(14)(11) "Tangible personal property," personal property that can be seen, weighed, 13
measured, felt, or touched, or that is in any other manner perceptible to the 14
senses. The term includes electricity, water, gas, steam, and prewritten computer 15
software. 16
Section 2. That § 10-45-2 be AMENDED: 17
10-45-2. There is hereby imposed a tax upon the privilege of engaging in business 18
as a retailer, a tax of four and two-tenths at the rate of five percent upon the gross receipts 19
of all sales of tangible personal property consisting of goods, wares, or merchandise, 20
except as otherwise provided in this chapter, sold at retail in the state to consumers or 21
users. 22
Section 3. That § 10-45-5 be AMENDED: 23
10-45-5. There is imposed a tax , at the rate of four and two -tenths percent set 24
forth in § 10-45-2, upon the gross receipts of any person from engaging or continuing in 25
any of the following businesses or services in this state: abstracters 26
(1) Abstracters; 27
(2) accountantsAccountants; 28
(3) ancillaryAncillary services; 29
(4) architectsArchitects; 30
(5) barbersBarbers; 31
(6) beautyBeauty shops; 32
(7) billBill collection services; 33
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(8) blacksmithBlacksmith shops; 1
(9) carCar washing; 2
(10) dryDry cleaning; 3
(11) dyeingDyeing; 4
(12) exterminatorsExterminators; 5
(13) garageGarage and service stations; 6
(14) garmentGarment alteration; 7
(15) cleaningCleaning and pressing; 8
(16) janitorialJanitorial services and supplies; 9
(17) specialtySpecialty cleaners; 10
(18) laundryLaundry; 11
(19) linenLinen and towel supply; 12
(20) membershipMembership or entrance fees for the use of a facility or for the right to 13
purchase tangible personal property, any product transferred electronically, or 14
services; 15
(21) photographyPhotography; 16
(22) photoPhoto developing and enlarging; 17
(23) tireTire recapping; 18
(24) weldingWelding and all repair services, except repair services for farm machinery, 19
attachment units, and irrigation equipment used exclusively for agricultural 20
purposes; 21
(25) cableCable television; and 22
(26) rentalsRentals of tangible personal property , except leases of tangible personal 23
property between one telephone company and another telephone company, motor 24
vehicles as defined pursuant to § 32-5-1 leased under a single contract for more 25
than twenty-eight days, and mobile homes. However, the 26
The specific enumeration of businesses and professions made in this section does 27
not, in any way, limit the scope and effect of the provisions of § 10-45-4. 28
Section 4. That § 10-45-5.3 be AMENDED: 29
10-45-5.3. There is imposed, at the rate of four and two-tenths percent set forth 30
in § 10-45-2, an excise tax on the gross receipts of any person engaging in oil and gas 31
field services (, group no. 138), as enumerated in the Standard Industrial Classification 32
Manual, 1987, as prepared by the Statistical Policy Division of the Office of Management 33
and Budget, Office of the President. 34
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Section 5. That § 10-45-6 be AMENDED: 1
10-45-6. There is hereby imposed a tax of four and two -tenths percent, at the 2
rate set forth in § 10-45-2, upon the gross receipts from sales, furnishing, or service of 3
gas, electricity, and water, including the gross receipts from such the sales by any 4
municipal corporation furnishing gas , and electricity , to the public in its proprietary 5
capacity, except as otherwise provided in this chapter, when sold at retail in the State of 6
South Dakota this state to consumers or users. 7
Section 6. That § 10-45-6.1 be AMENDED: 8
10-45-6.1. Except as provided in § 10-45-6.2, there is hereby imposed a tax of 9
four and two-tenths percent, at the rate set forth in § 10-45-2, upon the gross receipts 10
from providing any intrastate, interstate, or international telecommunications service that 11
originates or terminates in this state and that is billed or charged to a service address in 12
this state, or that both originates and terminates in this state. However, the tax imposed 13
by this section does not apply to: 14
(1) Any eight hundred or eight hundred-type service, unless the service both originates 15
and terminates in this state; 16
(2) Any sale of a telecommunication service to a provider of telecommunication 17
services, including access service, for use in providing any telecommunication 18
service; or 19
(3) Any sale of interstate telecommunication service provided to a call center that has 20
been certified by the secretary of revenue to meet the criterion established in § 10-21
45-6.3 and the call center has provided to the telecommunications service provider 22
an exemption certificate issued by the secretary indicating that it meets the 23
criterion. 24
If a call center uses an exemption certificate to purchase services not meeting the 25
criterion established in § 10-45-6.3, the call center is liable for the applicable tax, penalty, 26
and interest. 27
Section 7. That § 10-45-6.2 be AMENDED: 28
10-45-6.2. There is hereby imposed a tax of four and two-tenths percent, at the 29
rate set forth in § 10-45-2, upon the gross receipts of mobile telecommunications services, 30
as defined in 4 U.S.C. § 124(7) as of (January 1, 2002), that originate and terminate in 31
the same state and are billed to a customer with a place of primary use in this state or 32
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are deemed to have originated or been received in this state and to be billed or charged 1
to a service address in this state if the customer's place of primary use is located in this 2
state regardless of where the service actually originates or terminates. Notwithstanding 3
any other provision of this chapter and for purposes of the tax imposed by this section, 4
the tax imposed upon mobile telecommunication services must be administered in 5
accordance with 4 U.S.C. §§ 116- to 126, as in effect on, inclusive (July 28, 2000). 6
Section 8. That § 10-45-8 be AMENDED: 7
10-45-8. Except as otherwise provided in this chapter, there is imposed a tax of 8
four and two-tenths percent, at the rate set forth in § 10-45-2, upon the gross receipts 9
from all sales of tickets or admissions to: 10
(1) Places of amusement; 11
(2) Athletic contests; or 12
(3) Events. 13
Section 9. That § 10-45-71 be AMENDED: 14
10-45-71. There is imposed a tax of four and two-tenths percent on, at the rate 15
set forth in § 10-45-2, upon the gross receipts from the transportation of passengers. The 16
tax imposed by this section applies to any transportation of passengers if the passenger 17
boards and exits the mode of transportation within this state. 18
Section 10. That a NEW SECTION be added to chapter 10-45: 19
The rate imposed by this chapter upon the gross receipts of all sales of food and 20
food ingredients, as defined by § 10-45-1, is zero percent. 21
Section 11. That § 10-46-1 be AMENDED: 22
10-46-1. Terms, as used in this chapter mean: 23
(1) "Business," any activity engaged in by any person or caused to be engaged in by 24
such person with the object of gain, benefit, or advantage, either direct or indirect; 25
(2) "Candy," any preparation of sugar, honey, or other natural or artificial sweeteners 26
in combination with chocolate, fruits, nuts or other ingredients or flavorings in the 27
form of bars, drops, or pieces. The term, candy, does not include any preparation 28
containing flour and does not require refrigeration; 29
26.597.27 7 1281
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(3) "Delivery charges," charges by the retailer for preparation and delivery to a location 1
designated by the purchaser of tangible personal property, any product transferred 2
electronically, or services including transportation, shipping, postage, handling, 3
crating, and packing. The term does not include postage for direct mail; 4
(4) "Fair market value," the price at which a willing seller and willing buyer will trade. 5
Fair market value shall must be determined at the time of purchase. If a public 6
corporation is supplying tangible personal property or any product transferred 7
electronically that will is to be used in the performance of a contract, fair market 8
value shall must be determined pursuant to § 5-18B-7. This definition also applies 9
to chapter 10-45; 10
(5)(3) "Food" and "food ingredient," any substance, whether in liquid, concentrated, solid, 11
frozen, dried, or dehydrated form, that is sold for ingestion or chewing by humans 12
and is consumed for its taste or nutritional value. The term, food, does These terms 13
do not includealcoholic beverages, tobacco, or prepared food: 14
(a) Alcoholic beverages, as defined in § 35-1-1; 15
(b) Cannabis or cannabis products, as defined in § 43-20G-1; 16
(c) Cigarettes, as defined in § 10-50B-4; 17
(d) Prepared food; or 18
(e) Tobacco products, as defined in § 34-20G-1; 19
(6)(4) "Included in the measure of tax," the tangible personal property, any product 20
transferred electronically, or the service was purchased from a retailer licensed 21
under chapter 10-45 and that retailer has included the tax in the amount received 22
from the sale; 23
(7)(5) "In this state" or "in the state," within the exterior limits of the State of South 24
Dakota and includes all territory within such the limits owned by or ceded to the 25
United States of America; 26
(8)(6) "Prepared food," any food: 27
(a) Food sold in a heated state or heated by the seller; two 28
(b) Two or more food ingredients mixed or combined by the seller for sale as a 29
single item; or food 30
(c) Food sold with eating utensils provided by the seller, including plates, 31
knives, forks, spoons, glasses, cups, napkins, or straws . A plate, but does 32
not include a container or packaging used to transport the food. 33
Prepared food does not include food that is only cut, repackaged, or pasteurized 34
by the seller, and eggs, fish, meat, poultry, and foods containing these raw animal 35
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foods requiring cooking by the consumer as recommended by the Food and Drug 1
Administration in chapter 3, part 401.11 of its Food Code as of January 1, 2003, 2
so as to prevent food borne illnesses; 3
(8A)(7) "Product transferred electronically," any product obtained by the purchaser by 4
means other than tangible storage media. A product transferred electronically does 5
not include any intangible such as a patent, stock, bond, goodwill, trademark, 6
franchise, or copyright.; 7
(9)(8) "Purchase," any transfer, exchange, or barter, conditional or otherwise, in any 8
manner or by any means whatsoever, for a consideration. A transaction, whereby 9
the possession of property is transferred but the seller retains the title as security 10
for the payment of the price, is a purchase; 11
(10)(9) "Purchase price," shall have the same meaning as gross receipts defined in 12
chapter 10-45; 13
(11)(10) "Retailer," any person performing services in this state or engaged in the 14
business of selling tangible personal property or products transferred electronically 15
for use, storage or other consumption within the meaning of this chapter. However, 16
if in the opinion of the secretary of revenue, it is necessary for the efficient 17
administration of this chapter to regard any salesmen, representatives, truckers, 18
peddlers, or canvassers as agents of the dealers, distributors, supervisors, 19
employers, or persons under whom they operate or from whom they obtain the 20
tangible personal property or any product transferred electronically sold by them 21
irrespective of whether they are making sales on their own behalf or on behalf of 22
such dealers, distributors, supervisors, employers, or persons, the secretary of 23
revenue may so regard them and may regard the dealers, distributors, supervisors, 24
employers, or persons as retailers for purposes of this chapter; 25
(12)(11) "Retailer maintaining a place of business in the state," any retailer having or 26
maintaining within this state, directly or by a subsidiary, an office, distribution 27
house, sales house, warehouse, or other place of business, or any agents operating 28
within the state under the authority of the retailer or its subsidiary, irrespective of 29
whether such place of business or agent is located here permanently or temporarily 30
or whether such retailer or subsidiary is admitted to do business within this state 31
pursuant to the laws of the State of South Dakota granting the rights of foreign 32
corporations to do business in this state; 33
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(13)(12) "Secretary," the secretary of the Department of Revenue or any duly authorized 1
and appointed assistant, deputies, or agents of the secretary charged with the 2
administration or enforcement of this chapter; 3
(14) "Soft drinks," any nonalcoholic beverages that contain natural or artificial 4
sweeteners. The term, soft drinks, does not include any beverage that contains 5
milk or milk products, soy, rice of similar milk substitutes, or greater than fifty 6
percent of vegetable or fruit juice by volume; 7
(15)(13) "Storage," any keeping or retention in this state for use or other consumption 8
in the State of South Dakota for any purpose except sale in the regular course of 9
business; 10
(16)(14) "Tangible personal property," personal property that can be seen, weighed, 11
measured, felt, or touched, or that is in any other manner perceptible to the senses 12
if furnished or delivered to consumers or users within this state. The term includes 13
electricity, water, gas, steam, and prewritten computer software; and 14
(17)(15) "Use," the exercise of right or power over tangible personal property or any 15
product transferred electronically incidental to the ownership of that property, 16
except that it does not include the sale of that property in the regular course of 17
business. Use also includes the use of the types of services, the gross receipts from 18
the sale of which are to be included in the measure of the tax imposed by chapter 19
10-45, and the delivery or causing delivery into this state of tangible personal 20
property or any product transferred electronically intended to advertise any 21
product or service or promote or facilitate any sale to South Dakota residents. 22
Section 12. That § 10-46-2.1 be AMENDED: 23
10-46-2.1. For the privilege of using services in South Dakota this state, except 24
those types of services exempted by § 10-46-17.3, there is imposed on the person using 25
the service an excise tax equal to four and two -tenths at the rate of five percent of the 26
value of the services at the time they are rendered. However, this This tax may not be 27
imposed on any service: 28
(1) Service rendered by a related corporation , as defined in subdivision 10-43-1(11), 29
for use by a financial institution, as defined in subdivision 10-43-1(4); or on any 30
service § 10-43-1; or 31
(2) Service rendered by a financial institution, as defined in subdivision 10-43-1(4) 32
§ 10-43-1, for use by a related corporation as defined in subdivision 10-43-1(11). 33
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For the purposes of this section, the term, "related corporation," includes a means 1
a corporation associated with another as its parent or subsidiary, or in a brother -sister 2
relationship. The term includes a corporation, which together with the financial institution, 3
is part of a controlled group of corporations, as defined in 26 U.S.C. § 1563 as in effect 4
on (January 1, 1989), except that the eighty percent ownership requirements set forth in 5
26 U.S.C. § 563(a)(2)(A) § 1563(a) for a brother-sister controlled group are reduced to 6
fifty-one percent. 7
For the purpose of this chapter, services rendered by an employee for the use of 8
the employer are not taxable. 9
Section 13. That § 10-46-2.2 be AMENDED: 10
10-46-2.2. An excise tax is imposed upon the privilege of the use of rented 11
tangible personal property and any product transferred electronically in this state at the 12
rate of four and two -tenths percent of set forth in § 10-46-2.1, on the rental payments 13
upon the property. 14
Section 14. That § 10-46-48 be AMENDED: 15
10-46-48. All revenue arising under the operation of Except as otherwise 16
provided, revenue collected pursuant to this chapter shall immediately must be turned 17
over to the state treasurer and by him credited to deposited in the general fund. 18
The treasurer shall deposit in the school building construction fund, established in 19
section 25 of this Act, two percent of the taxes collected by the secretary of the 20
Department of Revenue pursuant to this chapter. 21
Section 15. That § 10-46-58 be AMENDED: 22
10-46-58. There is imposed a tax of four and two-tenths percent on, at the rate 23
set forth in § 10-46-2.1, upon the privilege of the use of any transportation of passengers. 24
The tax imposed by this section applies to any transportation of passengers if the 25
passenger boards and exits the mode of transportation within this state. 26
Section 16. That § 10-46-69 be AMENDED: 27
10-46-69. There is hereby imposed a tax of four and two-tenths percent, at the 28
rate set forth in § 10-46-2.1, upon the privilege of the use of mobile telecommunications 29
services, as defined in 4 U.S.C. § 124(7) as of (January 1, 2002 ), that originate and 30
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terminate in the same state and are billed to a customer with a place of primary use in 1
this state. Notwithstanding any other provision of this chapter and for purposes of the tax 2
imposed by this section, the tax imposed upon mobile telecommunication services must 3
be administered in accordance with 4 U.S.C. §§ 116- to 126, as in effect on , inclusive 4
(July 28, 2000). 5
Section 17. That § 10-46-69.1 be AMENDED: 6
10-46-69.1. Except as provided in § 10-46-69, there is hereby imposed a tax of 7
four and two-tenths percent, at the rate set forth in § 10-46-2.1, upon the privilege of the 8
use of any intrastate, interstate, or international telecommunications service that 9
originates or terminates in this state and that is billed or charged to a service address in 10
this state, or that both originates and terminates in this state. However, the The tax 11
imposed by this section does not apply to: 12
(1) Any eight hundred or eight hundred type service unless the service both originates 13
and terminates in this state; 14
(2) Any sale of a telecommunication service to a provider of telecommunication 15
services, including access service, for use in providing any telecommunication 16
service; or 17
(3) Any sale of interstate telecommunication service provided to a call center that has 18
been certified by the secretary of revenue to meet the criterion established in § 10-19
45-6.3 and the call center has provided to the telecommunications service provider 20
an exemption certificate issued by the secretary indicating that it meets the 21
criterion. 22
If a call center uses an exemption certificate to purchase services not meeting the 23
criterion established in § 10-45-6.3, the call center is liable for the applicable tax, penalty, 24
and interest. 25
Section 18. That § 10-46-69.2 be AMENDED: 26
10-46-69.2. There is hereby imposed a tax of four and two-tenths percent, at the 27
rate set forth in § 10-46-2.1, upon the privilege of the use of any ancillary services. 28
Section 19. That a NEW SECTION be added to chapter 10-46: 29
The rate of tax imposed by this chapter upon the use, storage, or consumption in 30
this state of food and food ingredients is zero percent. 31
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Section 20. That § 10-46E-1 be AMENDED: 1
10-46E-1. There is hereby imposed an excise tax of four and two-tenths percent, 2
at the rate of five percent, on the gross receipts from the sale, resale, or lease of farm 3
machinery, attachment units, and irrigation equipment used exclusively for agricultural 4
purposes. However, if If any trade-in or exchange of used farm machinery, attachment 5
units, and irrigation equipment is involved in the transaction, the excise tax is only due 6
and may only be collected on the cash difference. 7
Section 21. That § 10-46E-9 be AMENDED: 8
10-46E-9. The Except as otherwise provided, revenue from the tax imposed by 9
this chapter shall be deposited in the general fund. 10
The treasurer shall deposit in the school building construction fund, established in 11
section 25 of this Act, two percent of the taxes collected by the secretary of the 12
Department of Revenue pursuant to this chapter. 13
Section 22. That § 10-50-3 be AMENDED: 14
10-50-3. A tax is imposed, whether or not a sale occurs, at the following rates on 15
all cigarettes held in this state for sale by any person: 16
Class A, on cigarettes weighing not more than three pounds per thousand, seventy-17
six and one-half mills twelve and one-half cents on each cigarette. 18
Class B, on cigarettes weighing more than three pounds per thousand, seventy-six 19
and one-half mills twelve and one-half cents on each cigarette. 20
Section 23. That § 10-58-1 be AMENDED: 21
10-58-1. There is imposed upon owners and operators a special amusement 22
excise tax of four and two-tenths five percent of the gross receipts from the sale or the 23
operation of any mechanical or electronic amusement device. The tax imposed by this 24
section is in lieu of the tax imposed pursuant to chapter 10-45. 25
Section 24. That § 10-58-5 be AMENDED: 26
10-58-5. The Except as otherwise provided, the tax generated by this chapter 27
must be deposited in the general fund. 28
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The treasurer shall deposit in the school building construction fund, established in 1
section 25 of this Act, two percent of the taxes collected by the secretary of the 2
Department of Revenue pursuant to this chapter. 3
Section 25. That a NEW SECTION be added to chapter 13-24: 4
There is created the school building construction fund, to be administered by the 5
Department of School and Public Lands, for the purpose of making loans to school districts 6
to construct or expand a school building, as provided in section 26 of this Act. The 7
treasurer shall deposit in the fund two percent of the taxes collected pursuant to: 8
(1) Chapter 10-45; 9
(2) Chapter 10-46; 10
(3) Chapter 10-46E; and 11
(4) Chapter 10-58. 12
Any interest earned on moneys in the fund must remain in the fund. Any repayment 13
of the principal amount of a loan must be deposited into the fund and used for making 14
new loans. Money in the fund designated for loans is appropriated through the general 15
appropriation bill for the purposes provided in section 26 of this Act. 16
The commissioner of the department shall approve vouchers, and the state auditor 17
shall draw warrants to pay expenditures authorized from this fund. 18
Section 26. That a NEW SECTION be added to chapter 13-24: 19
The Department of School and Public Lands may make loans from the school 20
building construction fund, created in section 25 of this Act, to a school district for the 21
purpose of constructing or expanding a school building. The amount of the loan may not 22
exceed forty percent of the total cost of the construction or expansion project. The 23
department may use up to one percent of the principal amount of a loan to offset the 24
department's expenses in administering the loan. 25
Any loan made by the department must be provided to the district at an interest 26
rate of zero percent. The terms of the loan may not require collateral from the district. 27
The terms of the loan must require that the payments be based on a straight and 28
level amortization of twenty years and be made annually over a term of twenty years, 29
with the first payment due one year from the date of the funding of the loan. 30
The department shall make available moneys from the school building construction 31
fund, created in section 25 of this Act, as follows: 32
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(1) Thirty percent for the construction or expansion of a school building in a school 1
district that has four thousand or more students; and 2
(2) Seventy percent for the construction or expansion of a school building in all other 3
school districts. 4
The amount of loans made in a year under this section must exceed sixty -million 5
dollars and may not exceed ninety-million dollars. 6
For purposes of this section, a "school building" is a structure that houses the 7
academic instruction, extracurricular activities, and other functions of a kindergarten 8
through twelfth grade educational program. 9
Section 27. That a NEW SECTION be added to chapter 13-24: 10
A school district is not eligible for a loan under section 26 of this Act if: 11
(1) The school district is eligible for a loan under § 11-15-8; 12
(2) The municipality in which the district is headquartered is less than ten miles from 13
a municipality in which another school district is headquartered; or 14
(3) The school district has a fall enrollment of fewer than two hundred students and is 15
not designated as a sparse school district, as defined in § 13-13-78. 16
Section 28. That a NEW SECTION be added to chapter 13-24: 17
The School Finance Accountability Board within the Department of Education shall 18
promulgate rules, pursuant to chapter 1-26, specifying: 19
(1) The process by which: 20
(a) A school district applies for a loan; 21
(b) The Department of Education reviews, assesses, and approves a school 22
district's application; and 23
(c) The Department of School and Public Lands disburses a loan to a school 24
district; and 25
(2) The information a school district must provide when applying for a loan pursuant 26
to section 26 of this Act, including: 27
(a) The amount of money currently in the district's capital outlay fund; 28
(b) The amount of money the district has transferred and the number of 29
transfers the district has made from the capital outlay fund, pursuant to 30
§ 13-16-6 during the previous ten years; 31
(c) The district's current levy for the capital outlay fund; 32
(d) The district's fall enrollment for the current fiscal year; and 33
26.597.27 15 1281
Underscores indicate new language.
Overstrikes indicate deleted language.
(e) The enrollment trends of the district during the previous ten years; and 1
(3) The criteria by which the Department of Education assesses a school district's 2
application for a loan in accordance with section 26 of this Act, including: 3
(a) The minimum amount of money, in proportion to the district's fall 4
enrollment, that must currently be in a district's capital outlay fund; 5
(b) The maximum amount of money a district may have transferred from the 6
capital outlay fund, pursuant to § 13-16-6 during the previous ten years; 7
(c) The maximum levy a district may currently have set for the district's capital 8
outlay fund; and 9
(d) The minimum increase necessary in the district's capital outlay levy to be 10
sufficient for the district to repay the loan. 11
Section 29. That a NEW SECTION be added to chapter 13-24: 12
On or before August first of each year, the Department of School and Public Lands 13
shall submit a report to the special committee, created in § 4-8A-2, detailing the number, 14
amounts, and recipients of loans provided by the school building construction fund created 15
in section 25 of this Act, and other relevant information pertaining to the fund or program, 16
as requested by the committee. 17
Section 30. That 2023 Session Laws, chapter 32, § 19 be REPEALED: 18
Section 31. The amendments to the Code sections in sections 1 to 17, inclusive, 19
of this Act are repealed on June 30, 2027, and those Code sections will revert in word and 20
substance to that which existed immediately prior to the effective date of this Act. 21