Home Rule is Bad for Business
Published March 2, 2021

Whether we like it or not, our government affects our daily lives, but this is especially true when getting down to the bottom line in business.

As an example, in 2018 Rapid City was reported to have lost over “$50,000,000 of new residential construction,” all due to increased fees and other restrictive regulations making our city less competitive. And then in 2020, the Rapid City Council after a second reading voted 7-2 to shutdown businesses outright and then did it again later that same year, keeping businesses closed and shuttering others for good.

Under Home Rule, cities can create any “new or increased fees or increases in existing taxes including by way of illustration, and not in limitation, sales, use or other ad valorem taxes on internet sales or purchases,” all without “refer[ing] to a vote of the people,” as is described in the Home Rule Charter of Aberdeen. Notably, this is the same type of language that appears in the Home Rule Charter of the cities of Pierre, Beresford, Watertown, and Sioux Falls.

In fact, after Sioux Falls adopted their Home Rule Charter in 1994, the Sioux Falls City Council passed an ordinance creating permit and inspection fees, that extended beyond the actual cost of the inspection, and included property owned by the government. This led to the South Dakota state legislature passing SB 125 prohibiting such actions. But the City of Sioux Falls took the matter to court and ultimately won, preserving their new found “fee” to generate new revenue. And unlike the two-reading requirement under Dillon’s Rule cities, the Home Rule Charter City of Brookings held a Special City Council meeting on March 23, 2020 and shutdown businesses after only one reading all because the “City of Brookings Charter Article II, Section 2.14 allows for the passage of Emergency Ordinances on their first reading.” In other words, Brookings provided minimal notice and because of their “greater flexibility” under Home Rule – they were allowed to shutdown businesses the same day of the special council meeting, without any other opportunities for business owners to be heard.

Once a City obtains a Home Rule charter, often the first thing they do is increase taxes and fees, leaving many citizens quickly disillusioned and often businesses are the ones bearing the brunt of it. As one Sioux Falls resident reported several years after the City adopted their charter, “the Home Rule Charter has been so abused by [our] out of control administrations … we are being taxed and levied fees at greater rates than ever before with little to show.”

Sadly, using Home Rule as a weapon instead of a tool is a nationwide trend. In Illinois, the Illinois Municipal League pushed for legislation to expand the number of municipalities eligible for Home Rule for the sole purpose of “allow[ing] them to raise more money through local taxes and fees.” The Illinois Realtors Association talked at length about “the increased debt for local governments[;]… higher property taxes without voter approval[; and all the]… additional regulations, red tape and fees … that Home Rule authority allows.”

That’s why some cities like Rockford, Illinois have repealed their Home Rule Charters after “raising property taxes in consecutive years … [and] ‘abusing its power to tax.’”

Which was one of the main reasons the Rapid City rejected Home Rule in 1965, as the first city in South Dakota to reject Home Rule. According to the article “An Inquiry into Rapid City’s Rejection of Home Rule,” which appeared in the University of South Dakota magazine Public Affairs in 1965, two of the top reasons citizens rejected it was because of a “belief that new, municipal taxes would accompany home rule;” and the likely “centralization of power in the City Council.” That’s likely why in 1989, after Mayor Keith Carlyle reintroduced it, the local Home Rule Committee recommended not to even put it to a vote.

Now over thirty years later, Mayor Steve Allender has introduced Home Rule after: increasing property taxes in 2015, 2018 and 2019; increasing old fees by 40% while creating new ones; and has tried to increase water rates, building permit fees along with others. And if Mayor Allender get’s his way by passing Home Rule, just like the 3.5% of cities in South Dakota, we too will likely see our taxes, fees and the cost of business go up – ultimately hurting the bottom line for businesses.

The Home Rule Charter Committee was first convened on May 4, 2020 and according to South Dakota Codified Law § 6-12-7 has until May 4, 2021 to hold an election. To date, no charter has been introduced, reviewed or proposed, and no election date has been set.

Please help us continue our fight!