City of Sioux Falls claims they have a legal obligation to raise our property taxes

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Sometimes what you say is as important as what you do. In the administration’s yearly stab at raising our property taxes (even with property values and housing costs thru the roof) they are now using language that says we basically have a legal obligation to raise your taxes (Item #61):

Background & Objective: This ordinance shows the budgets of the Governmental Funds for the year ending December 31, 2024, and the required revenues and sources.

Notice the word ‘required’ added to the description. There is NO requirement that the city raises our property taxes. Budgets are fluid when you are proposing them, and the city council can amend that budget so an increase would NOT be required.

Within the actual ordinance itself, the language is even more suggestive;

That the sums of money that are listed in Exhibit A attached hereto and made a part of this ordinance are appropriated to meet the lawful expenses and liabilities of the City in fiscal year 2024.

So does the city council have a legal requirement to pass this? NO. The only requirement they have is to either pass it or not and adjust the budget accordingly. They do have a choice in the matter and to suggest they MUST legally pass this to uphold the PROPOSED 2024 budget is a load of hogwash.

This will likely pass with maybe 1 or 2 dissenters, but I hope a couple of the dissenters get together and have an amendment discussion about removing the language that suggests they must LEGALLY vote for the increase.

Over the years when I have seen past administrations pull this stunt where they tell councilors they have a legal obligation to vote YES I ask the question? Then why are they even bothering to vote if they have NO choice?

Cut the crap! There is NO legal requirement to raise our taxes, but there is a legal requirement that our city council acts within the best interest of the public’s coffers, and with one of the worst economic downturns since 2008 and housing costs skyrocketing, that best interest would be to vote NO on an increase and let the administration make the cuts to the budget THEY proposed. Then let them have a poutfest presser calling out the council for doing their due diligence.

MORE FUN WITH THE COUNCIL TUESDAY NIGHT

The council will also get an update on the disposal of the zoo mounts at the informational meeting, then they will be sucked into a series of executive sessions in which I’m sure they will be told they only have ONE option on the matter (because it is easier to bully councilors behind closed doors). It will also be interesting to see if the presentation includes any recommendations from experts.

During the regular meeting they will also be discussing creating an arts commission (Item #63). This is another initiative by the mayor’s office that has been shrouded in secrecy. While I support the concept of more public arts coordination with the city NOT under the current management.

City of Sioux Falls promotes property tax increases

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The city’s finance director is pushing for a property tax increase again this year. I found this proposal interesting considering the mayor is increasing the budget next year for pools. The city can only use the money for OPERATING expenses. So while they CANNOT spend the money on capital improvements they can use the money to fix potholes and pay lifeguards.

2022 Property Tax $84.9 M – 37%

2022 Assessed Value, 80% Residential, 37% Commercial

ASSESSED VALUE OF SINGLE-UNIT RESIDENTIAL PROPERTIES, $200K – $317.7K, 34%

As you can see, residential property taxes are the biggest chunk of property taxes paid. In other words we are OVERTAXING residential property owners to subsidize things like $25 million dollar parking ramps for condo dwellers.

When people talk about TIFs or rebates for large developers they claim there is this mysterious ROI, even though NO independent study has been done to show us what that ROI is. I would argue that a residential property owner actually has a higher ROI, besides the taxes they pay to help with street and curb and gutter improvements, they may hire a lawn care company or hire a contractor to do work to their property, creating actual jobs.

I have argued for a long time we have NO reason to increase property taxes each year because of natural growth. If we also started taxing commercial properties at their actual legal assessment (and not a reduced TIF assessment) we would also haul in millions in property tax revenue.

Once again, the city is sticking it to the little guy so the big guy has a small tax bill.

Is the City of Sioux Falls hoarding tax dollars?

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If you watch the city council informational meeting today you will see a presentation on the city’s reserves;

The city has over $80 million in reserves and many councilors questioned why it was so high. Of course the finance director did his best telling councilors we needed to have record reserves to save for a rainy day (or a derecho).

There are two reasons why we are at this point, the first one is the obvious flush of Federal money. As I understand it the city had many projects planned with our own capital before the pandemic and once the money started flowing in the city started allocating ARPA money to these projects instead of city capital. We can argue all we want about the ethics of that kind of budgeting, but I think the public is really in the dark about how this works. Of course the finance director started questioning the Federal bailouts and blaming them for massive inflation which is hilarious coming from a dude who gladly cashed the Fed’s checks.

The second reason we have record reserves is that we are being overtaxed. This of course was NOT brought up by the finance director during the meeting but councilor Neitzert touched on it by saying there is a perception that the city is hoarding money and they shouldn’t be doing that.

This has been my argument all along against increasing city property taxes every year. The city has the revenue, but more importantly with our population and development growth (almost $2 billion last year) there is no reason to increase these taxes and fees due to natural economic growth.

So why are we in this position? Because of indiscriminate tax rebates and TIFs to developers. If we eliminated this high-end socialist welfare system to wealthy developers we could keep our property taxes down.

We also need to stop giving money away to play palaces.

We can’t on one hand and say we are in dire straits then turnaround and throw millions away on amenities and wants. We are either one or the other. The city coffers are NOT a savings account, they collect fees and taxes and spend them on the social welfare of our city.

If I were a city councilor I would propose a one-time city property tax rebate and chip away at the city’s trough.

Noem’s grocery tax repeal was just a political ploy

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I never believed Noem truly wanted this tax cut and was probably secretly giddy it failed. I would be shocked if ANY tax cut is approved this legislative session. Playing the Devil’s advocate, why would those who control the coffers want to eliminate a reliable revenue source?

If I were a legislator the prudent thing to do would have been a step reduction in the food tax (eliminating 1.5% this year and 1 penny the following three years and on the 5th year eliminate the municipal food tax portion).

I personally support the property tax cut. While they contend it will only save taxpayers around $300 a year it is around a $800 savings each year in Sioux Falls (that is the approximate take of the SFSD for a $100K valuation). The food tax cut would only save me about $150 a year. As for helping the poor with a food tax cut that is a false flag (an overall sales tax reduction would have a bigger impact). Since most legitimately poor in our state receive food from food banks, FREE school lunches, WIC, churches and SNAP they pay NO taxes on food so why not give them real savings by reducing the overall sales taxes on anything purchased (especially on cigs and beer their biggest staples 🙂 I also think there should have been legislation to eliminate sales taxes on gas and electricity (something renters and homeowners both pay). As I said from the beginning, I don’t think our legislature has the courage to cut taxes. As my stepdad used to say, ‘Gutless Wonders’.

Mayor TenHaken proclaims it is time to focus on infrastructure

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DakotaNews chief softball pitcher, Brian Allen, recently did an interview with Paul asking him what we should focus on in 2023. Paul said it was time to get back to focusing on infrastructure.

I guess it only took 5 years for Paul to figure out the simple premise of local municipal government; you collect taxes and fees and provide essential services like road maintenance, water and sewer, public safety and outdoor recreation in our parks.

Ever since Mayor Munson, the city has focused more and more on chipping away at our 2nd penny for things like leather chairs for a private movie theater, landscaping and ‘other stuff’ for a private research facility, butterflies and tennis courts while giving massive tax breaks to welfare queen developers.

When former city commissioner Loila Hunking proposed the 2nd penny tax decades ago it was to be in a lockbox and only to be used on road maintenance and in rare occasions other infrastructure projects, since then the penny has been on a wild spending spree that has little to do with the pothole in front of your house.

It often cracks me up listening to past and current mayors and city councilors talk about how we need to ‘get back to’ focusing on infrastructure.

Don’t be fooled by the promises. There is going to be a big fight in Pierre this winter over reducing the food tax and property taxes, one of the proposals will win at the end of the day (I think the property tax cut has a better chance). Mayors and councilors across the state will be crying about the revenue loss and will be asking how they will be able to keep up with essential services and infrastructure.

Let me give you a little advice; stop spending our tax dollars on stupid sh!t.