Entries Tagged 'economy' ↓

The City of Sioux Falls is swimming in money

As the city council discussed giving $10 million towards the DSU Cyber project tonight and after watching the presentations and seeing the state supports this, I think it is a good project. Not sure I believe all the bull thrown about today, but it is a positive investment. I did shake my head though when the Dean of DSU was talking about what the $10 million investment in infrastructure was for and said something like, “It’s for campus lights and sidewalks, but we don’t know what that will cost since the final plans haven’t been drawn up yet.” So where did the $10 million number come from?

But what shocked me was these slides presented by the city finance director. Fortunately I took a screenshot, because these slides are NOT available online. The city has millions laying around in the reserve funds.

It is unfortunate the council was not told this last month so they could come up with projects (like cleaning up our core, or even better, CUTTING PROPERTY TAXES FOR ALL OF US! Instead the mayor, who hates transparency, hid the information from the council so he could push his pet projects, so far spending $12.5 million of it, with NO input from council except a vote once it was packaged in a neat little bow.

Whether you agree or disagree with the bonuses or the cyber project is of little concern, it is how the mayor secretly negotiated these projects that is very bad for good government.

Sioux Falls economy contracted -.07% in 2020

Sioux Falls citizen and economics enthusiast Mark Weber (who I believe actually has an economics degree) has been addressing the Sioux Falls City Council for several years at public input showing the other side of the Sioux Falls economy. Since the city is usually a month or two behind on releasing the monthly financials (we haven’t had a report since November 2020) Mark draws his data from the SD Department of Revenue. Thank you for your advocacy Mark. Here are his conclusions of 2020;

Sioux Falls Economy April 2019 vs. April 2020

Yesterday during the Sioux Falls City Council informational there was a presentation on the April Monthly Financial report. A citizen who has an economics degree, Mr. Weber often comes and breaks down the numbers further during public input. Yesterday he brought this graphic comparing 2019 to 2020 by the various business sectors. Makes me want to invest in medical labs.

Thinning of the Herd?

When I say this, I’m NOT talking about lives. No matter someone’s age, every life matters in this crisis.

I am talking about certain businesses that will ultimately close, and that’s not such a bad thing. I do however feel bad for the people who will lose their jobs permanently due to bad business planning.

The first victims will be small, privately owned restaurants and bars. I will miss a handful of them, but for the most part, some of them I will not. I have often argued that Sioux Falls has 700 restaurants yet not a decent place to eat. Some of these places will not be missed.

The second victims will be small franchise restaurants. A lot of them will close due to national sales and little to do with what is going on locally. Good riddance.

The third victims will be privately owned clothing boutiques, gift shops, etc. Or as I call them, rich doctor’s wives hobby businesses, I know that is not completely accurate, but a lot of them will not be missed either.

I have a feeling that many small telephone booth casinos will close to. Thank GOD! I wish they would all close.

Further down the road many of these smaller, privately owned car dealerships will shut down as the economy begins to spiral out of control. Also will not be missed. When I was looking for a used car a few months ago, I was amazed at all of the crooked crap they tried to pull over on you. I ended up purchasing a car from a trusted, local, larger dealership.

Many realtors will be also out of work when the housing market begins to go sour. This one is hard to predict though, because it could go in the opposite direction with rock bottom interest rates. This sector will be interesting to watch.

Small landlords will also be going bankrupt when renters can’t pay, and they can’t find tenants. This is sad, because they supply housing to many lower income folks, their options will dry up. Affordable housing will go straight out the window. This may have some positive results with the city looking at rent control legislation.

You may see some small national retailers close and some smaller grocery franchises.

I also suspect some major manufacturers will have some big layoffs or closures. Many have already started including a certain ‘ag’ business and a certain ‘energy’ company.

The good part of all this, thrift stores will be booming, I love thrift stores. I rarely buy anything new unless it is a tomato or apple. LOL. But it may be slim pickings for me 🙁

As I told someone last night, once the virus ends, the real sickness comes, the bottom dropping out of our economy locally and nationally. I am hoping we can recover quickly, I really do, but I also remember what 2008’s recovery was like, I still think some sectors are still in recovery from it. I compare this virus to getting a broken leg, it only takes a split second, but the recovery takes a lot longer. Don’t believe what the POTUS says, we won’t bounce back from this in a couple of months.

It’s going to be a rough couple of years. Enjoy the time you may be spending at home, use this time as I have to self reflect on what is important in your life. More and more the answer to me has been very simple; Friends. I miss them more than even Big Macs.

Sioux Falls Citizen Advocate asks great question about building permit valuations

Mark Weber is a regular inputer at council meetings, mostly on economic issues (I believe he has an economics degree). He recently sent this email to a city councilor;

For a long time (years) the finance department provides monthly graph of value of building permits, and a comparison to at least the previous couple of years.  I would be interested in knowing both the value and percentage of building permits that become part of the tax base, which would give a more realistic indicator, ie. projects of the city (public sector), non-profits (hospital), portion of private enterprise or public / private partnership that have been granted TIF.  I don’t believe any of this becomes part of the tax base (TIF’s eventually in 20 years).

Has anyone on the council already asked this question and I am unaware of the results?  I think this would be useful information to the taxpayers of Sioux Falls.

I have been an advocate for several years that when it comes to building permit valuations for the year it should be separated into categories, as Mark has suggested. Public projects and non-profits that don’t pay property taxes really can’t be put in the same basket. It was a way for city administrators to inflate numbers. Just look at the new Jefferson HS project. I can guarantee that we wouldn’t have even gotten close to last year’s record without it on the books. If they are paying NO property taxes (actually costing us), or are receiving rebates in the form of TIFs and BIDs how can it be a true economic indicator? It’s not, it’s just propaganda. I have asked the council for years to demand the administration break down the numbers and give a true representation.

Tax Incentives for Economic Development rarely pays off

Let’s look at some recent examples in Sioux Falls.

Uptown II; Taxpayers held the land for over 10 years collecting NO taxes for one developer, sold the land at a discount, gave them another 10-13 year tax break and in return we get an apartment building (that isn’t affordable housing) and a few parking spots for Levitt Pavilion.

Flopdation Park; State, County and City taxpayers will have spent over $30 million in infrastructure with only one tenant so far and NO signed agreements. And an employer that may provide 20 jobs at best for an Iowan Ice Cream factory.

Events Center; The building will cost taxpayers $180 million once paid for. While that may include the mortgage payments, it doesn’t include the yearly maintenance that comes from the same place as the mortgage payments, the CIP, a fund that is supposed to be for roads. While the EC may have a net operating gain, any of that ‘extra’ money doesn’t go to paying for the building or maintenance, it goes into a revolving fund that the management company uses. Than there is the supposed Economic Impact, since the EC has been open, tax revenue in Sioux Falls has actually gone down.

When you watch the latest episode of Last Week notice the part about the Fargo City Commission and how they approved a tax incentive for a company that was already moving there and said they didn’t need the tax incentive, the city commission approves it anyway. Sound familiar Sioux Falls?

But hey, without all these great amenities in Sioux Falls the rich millionaire doctors wouldn’t be moving here and building pools.

Keep using out-of-state contractors and keep watching the local economy spiral downward

Obviously, in the Free enterprise world, it is hard for the city to regulate what national franchises come to town, or how much of their profits they ship out of state. But when it comes to who the city chooses to do business with, they do have control, so why keep getting in bed with out-of-state contractors?

The latest is Lyft, which I think is great, as long as it has Uber to compete with. My issue isn’t with the convenience of Lyft, but how this National franchise probably isn’t playing by the same rules as our local cab companies, in other words giving the outsider the advantage. Seems odd that in the dead of the night under secret negotiations that did not include our city council, Lyft can now operate in Sioux Falls. So how did this happen so quickly? My guess is that Lyft isn’t following the same rules as the SF cab companies. Which is fine, as long as all of those regulations are lifted for the local companies also, which I’m guessing are not. Since our local cab companies will not be able to play the same kind of baseball as Lyft, they will eventually go bankrupt, and 25% of what you pay in cab fares from now on will go straight to California. So much for circulating in the local economy.

But there seems to be a trend here from the current administration. We also hired SMG and Ovations to run the Events Center. SMG is based out of Pennsylvania and Ovations out of Florida. Not only do their profits leave the state, they don’t promote any of the shows, so the out-of-state promoters all suck like a vacuum money out of our community. Add that to the fact that taxpayers have to pay around $10 million a year in a mortgage payment from our CIP (money that is supposed to be used on roads). As for the money the EC ‘makes’ that get’s put back into a rotating fund that SMG and Ovations uses as their disposal, so even if you believe the ‘operating in the black’ lie the mayor is constantly spouting, we as taxpayers in SF don’t see one red cent.

Besides Lyft, last week the city administration did it again, throwing more money out of town and out of state by hiring Nebraska company Landscapes Unlimited to run the municipal golf courses.

So while you can listen to our local politicians blame the Agriculture economy and Internet Sales for the lagging local economy, it is really the policy decisions of this administration that is sucking millions of dollars out of Sioux Falls each year.

South Dakota Middle Class left behind, working more

What we have known for awhile, the gap between rich and poor in SD getting wider;

6. South Dakota
> Middle class income growth 2011-2015: 5.0% (23rd lowest)
> Fifth quintile income growth: 9.8% (13th highest)
> Fifth quintile share of income: 48.2% (8th lowest)
> Middle class household income: $53,266 (23rd lowest)

South Dakota has one of the healthiest economies in the country. Only 2.8% of the state’s labor force is out of a job, the second lowest state unemployment rate in the country. In addition to a healthy job market, incomes are more evenly distributed in South Dakota than in most other states.

This may not remain the case for much longer, however. In the last five years, incomes among the middle 20% of earners have increased by only 5.0%, slightly slower than the 5.3% income growth among comparable households nationwide. Meanwhile, incomes among the wealthiest 20% of households in the state have gone up by 9.8%, higher than the comparable 8.4% average national income growth in the top quintile.

Did the Soccer tournament fall short for economic impact predictions

We were told that the tournament would have a major impact on the economy;

The soccer tournament is estimated to bring $17 million to the Sioux Falls area.

Lets test this prediction against July’s monthly financial report (Full Doc:7-17-monthly-fin-report).

We should have raised an additional $510,000 in sales tax revenue (3 pennies) from the year before if the economic impact was actually $17 million. But if you look at the numbers, it seems we didn’t bump up much from the month before.

For example, in June (MAY) we saw a $73,172 sales tax bump from the year before (3 pennies). Let’s say we were predicting the same bump in July (June). We had a $204,088 bump from the year before. Subtract the June numbers and you come up with a $130,916 bump from the tournament which would mean approximately a $4.3 million dollar bump. The biggest increase was in the 3rd penny entertainment tax and lodging (BID) tax which does not contribute to the city’s general fund.

$4.3 million dollar impact is nothing to shake a stick at for about a week of visitors, but it is certainly a long ways from the $17 million prediction.

Neel Kashkari, President Federal Reserve Bank of Minneapolis at Rotary

Neel spoke today at Rotary Club of Sioux Falls Downtown. He asked the audience to challenge him with tough questions.

He felt that if you are struggling finding workers or complaining about it, it is NOT that the workers don’t exist, but the wages are not high enough to attract them.

“If you’re not raising wages, you’re just whining.” (about finding enough workers)

I have consistently stood by the argument that when you pay your workers more, they spend more, which boosts the local economy, which in turn boosts the bottom line of your company. The middle class is more likely to spend more than they will invest or save if they make more, while the rich tend to put that money away where it doesn’t circulate as much.