Entries Tagged 'Taxes' ↓

How Strong Towns Principles Relate to Sioux Falls — Municipal Ponzi Scheme

I was sent this article, that I found very interesting relating to the urban sprawl of our city;

Since 2010 the City of Sioux Falls has annexed 3996 acres of land into the city. That is almost 400 acres per year. How much tax revenue did that additional property bring in? How much did it cost to annex those areas? How much will it cost to replace all the associated infrastructure when it needs replacement? The answers to those questions are hard to piece together (maybe a good use of tax dollars would be to hire a company specializing in this kind of data to pull it together for us). In the meantime, we have some anecdotal data to look at.

So Detroit is a cautionary tale for cities caught up in a municipal Ponzi scheme. Here in River City things look pretty good . Sales tax revenue is floating our boat right now. We have money in the budget. Marohn refers to this as the illusion of wealth. It looks like we have money but the residential developments on the edge of town — which don’t generate sales tax directly — are new and don’t require replacement. When that infrastructure requires replacement the property tax revenue collected in those areas probably isn’t going to be enough to pay for it. Other areas of the city that are generating revenue will have to subsidize those areas — until they can’t. It happens slowly then all at once. Welcome to Detroit.

Ironically, several years ago when I got into Strongtowns, one of the main reasons I was drawn to it’s message was what they were saying about Urban Sprawl. It soon will be very expensive to live in Sioux Falls, if we are not already there.

Guest Post: Mike Zitterich, Sioux Falls City Council and Taxes

This was an email Mike sent to City Council and gave me permission to post;

Good Morning,

After attending the 3/3/2020 City Council Session the other night listening to many interesting debates, I want to discuss a few issues that I feel are important here.

The definition of the word Surplus is where you have excess monies available at the end of a fiscal season after all expenses have been paid out for the year.

My definition of a surplus is one of which the people spent a lot of money for the year, and ‘we’ over paid our taxes. This is the proper way to think of a surplus, not to mention, build a case that this would prove that the citizens are overly taxed, and that we could very easily afford to cut the tax rates.

Lets remember here shall we, “I” like many people, only consented to give up a portion of our sovereign property rights to the “City” in order to pool our assets as one to provide us the basic necessary services to each other. Therefore we agreed to fund Basic Government @ 1% Sales Tax in order to pay for…

– Roads/Streets, and the basic maintenance and repairs needed to maintain them thru out the year.

– Public Parks, where we the people have donated, or ceded some of our land to the city in order to provide each other cheap, fun, family activities thru out the township.

– Police Department, we agreed to fund a local police force in order to protect our properties, keeping us safe from bad men and women whom may attempt to harm us.

– Local Fire Department, in order to provide us Fire, Rescue, and Emergency Safety in order keep us safe thus protecting each other and our properties.

– Public Utilities (water, sewer, lights, electricity) in order to pool our infrastructure to help provide the basic most cheapest service possible as a community.

– Public Parking, helping to provide enough sufficient space thru out the town giving us cheap, well maintained parking spaces for FREE or at Discounted User Rates to go about our daily activities as a community of conducting business.

– Public Transportation in order to provide ourselves as a community the most cheapest service possible helping to provide us a way to commute to work, school, or to do daily activities as a community.

– Basic Government Administration in order to help manage, plan, and provide those basic services to the people.

That is all ‘we’ the people have consented to, and these costs should be as cheap and affordable as possible as to NOT over tax the people.

Now, we have placed in our ordinances the ability to raise in the short term of 2 years, the ability to borrow from the people money to invest in Land, Buildings, Infrastructure, New Roads, in order to expand the city, make our daily lives better, let alone improve upon our city. This is in fact the true purpose of our 2nd Penny Sales Tax. And this should be a temporary tax that should be used for 2 year periods, in order to NOT to place a burden on future generations. We simply give the City the ability to extend that tax up to 5 years. But as we ‘vote’ every 2 years to change our councils, the mayor, those Capital Plans change with those elections.

Thus – the 2nd Penny Tax in my opinion is a temporary tax, and should be allowed to expire when ‘we’ have raised the appropriate funds to pay for the land, new roads, new buildings, new infrastructure, etc.

The true measure of what it costs our city is the allocated expenses paid for by the 1st Penny Sales Tax. That is it.

This was the point I believe Pat Starr was attempting to make at the 3/3/2020 Council Session about the Property Tax issue. IF our Sales Tax is consistently creating huge surpluses year in and year out, and our population keeps growing every year by 3,500 people – that is an automatic $2,500,000 in new sales tax revenue every year, couple that with the Mayor restricting funds, re-financing the Bonds, the interest income that comes in from stocks, bonds, and capital, “WE” should be able to stop pulling from the Property Tax that the statutes allow us to take each year. Why do we keep keep taking more from Property Taxes, when we really do not need them.

This current ‘council’ and city administration currently believe that those property tax dollars are ours for the taking, no they are not. And there is NO mandate that we must use them. The statutes simply say, if we do not take them this year, we lose them. That is fine in my book. If we truly do NOT need them to balance our city budget, why not allow the STATE LEGISLATORS re-apportion those funds back to the people directly back to the School Districts, our Seniors, our Homeless population, our Low Income Citizens, our Children’s Lunch Programs, etc. This was the point Pat Starr was making. And I agree with him on that subject manner.

Now – I was hoping that Pat Starr and Greg Neitzert would have extended that little tax debate longer Tuesday night. They are two of the most respected city councilors, Greg and his analytic skills, and Pat with his common sense and due process. This is the DEBATE ‘we’ need to have as a community, and this is the discussion that we must force. I dont want anyone to argue, or fight. No. That is not the point, but those two are probally the best at leading this debate. Not to mention, its my most favorite topic mind you. I call for a respectful discussion in order to address this growing concern of mine –> To Much Revenue leads to an out of Control Government, and that leads to higher tax rates, more expenses, more ‘wants’.

We can very effectively cut our sales tax rates, and take less and less from property tax dollars, thus rewarding the people for their good work of Saving, Investing in our City, to spending lots of money, while helping to promote the city attracting foreigners, tourists, visitors to attend our public events, concerts, and attractions. That helps produce even more sales tax revenue.

Then there is the other Misc-Excise taxes, Imposts, and Duties that fund the Enterprise Funds, Programs, and Services offered by the city that raise their own revenues totally separate from sales and property taxes. They are self sufficient and create huge profits, which then provide us the capital needed to sustain them, invest in them, manage them. Again –> allows us to cut the Direct Taxes we call sales tax and property tax, which hurt the most vulnerable in our community.

Our effective sales tax rate is 1% – it then becomes a matter of how much ‘we’ need to borrow in the short term from the people for new roads, purchase land, new infrastructure, build new buildings, etc. Thus we create cost estimates to put forth a 2 year plan raise tax dollars from the people. That is what the Second Penny is for. And we allow the government to ‘tax’ us for up to 5 years. After we raise the necessary funds, this ‘tax’ should be allowed to expire. Until the next time ‘we’ need to raise funds in the short term.

Folks, this CITY can survive on $70,000,000 in Basic Sales Tax Funds; it can survive on the $200,000,000 it raises in Misc-Excises, Imposts, and Duties we collect to fund the activities and services of the city. We do not need to keep borrowing from bond holders, if we simply DO NOT over tax the people. We should be allowing the “citizens” to pay less in sales tax, which then allows them to invest in their own properties, spend a little extra cash, and perhaps save their money for tomorrow. “They” the citizens then become more vested in our community. Our revenue will rise in due time.

I will continue to hammer at this, lobby to lower our sales tax rate in the spirit of trying to save the citizens money. Thus rewarding them for a job well done.

In the end – we must stop over taxing people, we do NOT need anything so bad that it cannot wait 5 years until we can raise the necessary funds thru the 2nd penny. We need to be responsible, prudent, and manage our tax dollars better. We can and will lower these rates soon enough. It is just a matter of time.

I strongly encourage some thought on an ordinance that would mandate that the 2nd Penny expire every five (5) years; for no less than a term of two (2) years; placing the expiration on the same two year election cycle. This means that during a councilor’s 8 years (should anyone serve 2 terms); they would have to deal with less revenue for 2 of those 8 years in office. Not only does this help the citizens, I believe it encourages public debate, more discussion on goals, agenda, future wants and needs, thus slowing down the process of pushing items thru from 1st and 2nd Hearings. There have been a few items discussed where I felt we could have followed thru and deferred them a couple weeks. Public discussion is what we need to strive for. I do not believe this hurts the city one bit, the goal is to enforce, mandate, and encourage more public discussion on our future needs. 

Our current tax revenue consists of:

  • $126-130,000,000 million worth of Sales/Use Tax
  • $65,000,000 worth of Property Tax dollars (optional)
  • $200,000,000 estimated/projected Misc-Excises, Imposts, and Duties
  • $100,000,000 in Bonds, Federal and State Loans, Grants, Budget Restraints, Bond Refinancing

    Saving the Citizens $60-70,000,000 per year for a term of 2 years should NOT harm the City at anytime. This is a City that has a net position of nearly $2,000,000,000 billion dollars after all expenses, liabilities, debts, and future obligations are paid in full. That equates to writing each ‘resident’ a check in the amount of $10,000 dollars if we were to shutdown the city. That is a lot of money. Government should not create surpluses – that means the people are overly taxed. 

Please, lets encourage this respectful discussion, lets fix our spending problem, our debt problem, lets be good stewards of the community. We owe it to our ancestors, and to our future generations.

*DaCola Note; While I disagree with Mike on several city issues, I think he nailed it in this post. It is getting more and more expensive to live in Sioux Falls, and the main reason is we are extremely overtaxed. I agree that the 2nd Penny should be reviewed every 5 years and adjusted. I also think property taxes should decrease instead of increasing each year.

UPDATE II: The FIX is in on property taxes

UPDATE II: I went and talked to the equalization department today. After reviewing the increase, they explained to me that 90% of the increase is land value, in which is formulated different now. We also calculated that my taxes will probably go up $250 dollars next year, which is NOT $2 a month, just for the record.

UPDATE: I decided to go back and look at the records I could find

From 2008-2009 the value of my home went up 1.8%

From 2009-2012  the value of my home went up 0%

From 2012-2016  the value of my home went up 10% (aprox 2.5% per year)

From 2016-2017  the value of my home went up 1.8%

From 2017-2018  the value of my home went up 1.8%

From 2018-2019  the value of my home went up 2.3%

From 2019-2020  the value of my home went up 21.9%

As I predicted and warned people, the school bond, the new county jail and the multiple TIFs we hand out are going to catch up with us. The $2 a month boloney they pitched us was a farce, because I knew they were going to make hay with the assessments. And sure enough they did.

My increased assessments year after year have been steady, but reasonable. I have owned my home for 17+ years and my property taxes have doubled in that time.

I have done little upgrades to my home, except replacing windows, doors, adding new rain gutters a privacy fence and re-shingling after storm damage. I have done NO upgrades to the interior of my house.

So imagine my surprise when I got this in the mail yesterday;

Well, I was NOT surprised, I saw this coming like a freight train. We can’t keep borrowing money in Sioux Falls and not have a way to pay those bonds, so they bleed it out of us through back door tricks like assessments. Can I afford a 21.9% increase in my assessed value? I suppose, but it also means a lot less money in my pocket.

It was interesting listening to the State Legislators talk yesterday at the legislative coffee about state funding of education. Two Republicans made great points;

• The state gives the districts money and the districts decide how that money is spent (salaries, etc.).

• Administrator pay in SD ranks at 15th while teacher pay is at 49th. I haven’t checked that stat, but I know at one time in was around 22nd. There is a obvious disparity.

• Low voter turnout at school elections. The past school bond and school board elections both had around a 4% turnout. Basically the legislator was saying, if you want to have a say on how your local district is being funded, maybe you should show up and vote in these elections. AMEN Brother! But I also have to add their is voter suppression when you use super precincts, no precincts in the northern part of our city and have district finance department employees ‘hand count’ votes, while the business director puts those counts into the system without oversight.

Who knew that owning a house that was built in 1889 could increase in value by almost 22% in one year? Not bad for a home that is 131 years old. What a joke.

Graphic of Sioux Falls Taxes

A gentleman tonight during public input at the City Council meeting put this graphic up on the overhead during his presentation. I was disappointed he ran out of time before he started to address TIFs. I should recruit him to write for my blog.

Half-Penny Sales tax increase was a bad idea from the get go

Noem keeps up with the tradition of past Republican Governors in our state, telling us how poor we are right before the legislative session, then once it is over they start spending money on pet projects (mostly corporate handouts). Oldest trick in the book. This even comes after added revenue from online sales and the half penny increase;

Noem announced her budget plans Tuesday, which urged state departments to tighten their belts as they head into a difficult financial year. That plan included not having any discretionary inflation increases for overall K-12 education, Medicaid providers and state employees.

But that means there will be no change between target teacher salaries from 2020 to 2021, making it the third year the state has fallen behind on its promise to keep teacher pay competitive if the budget passes

I said it was a bad idea to raise taxes because I knew this would happen, the money went straight into the general fund for the Governor and legislature to waste. Even after several years, it still makes me livid that the legislature didn’t find the money elsewhere (that they have in investment funds) to pay teachers more. Now we are back to square one, and an unneeded tax increase to boot. Don’t get me started. Our State government has been inept for decades, and gets worse by the day.

While most South Dakotans barely scrape by, $355 Billion sits here in tax free trust havens

How much is $355 Billion? It is 710 times the City of Sioux Falls yearly budget. Yeah, it’s a lot of dough, and most South Dakotans don’t have a clue our legislators are allowing this while our benefit to the state coffers is virtually ZERO;

In recent years, countries outside the US have been cracking down on offshore wealth. But according to an official in a traditional tax haven, who has watched as wealth has fled that country’s coffers for the US, the protections offered by states such as South Dakota are undermining global attempts to control tax dodging, kleptocracy and money-laundering. “One of the core issues in fighting a guerrilla war is that if the guerrillas have a safe harbour, you can’t win,” the official told me. “Well, the US is giving financial criminals a safe harbour, and a really effective safe harbour – far more effective than anything they ever had in Jersey or the Bahamas or wherever.”

That means legislators are nodding through bills that they do not understand, at the behest of an industry that is sucking in ever-greater volumes of money from all over the world. If this was happening on a Caribbean island, or a European micro-principality, it would not be surprising, but this is the US. Aren’t ordinary South Dakotans concerned about what their state is enabling?

“The voters don’t have a clue what this means. They’ve never seen a feudal society, they don’t have a clue what they’re enabling,” Wismer said. “I don’t think there are 100 people in this state who understand the ramifications of what we’ve done.”

That’s what we get with ONE party rule in South Dakota (and it doesn’t even matter which party). If we could even implement a teeny-tiny tax on this wealth, it would help us out tremendously in education, road funding and healthcare as well as many other things. We could eliminate video lottery, the food tax, reduce property taxes and help address our drug crisis in the state. But we continue to elect the greedy and the stupid (who are one in the same).

Is the Sioux Falls School District really that tight on money? Several administrators get massive raises

So I started reading this Argus story about across the board raises, this is what the district said;

The wage gap between teachers and administrators in the Sioux Falls School District is widening.

School board candidates in May criticized the district for its spending on administrative salaries, but later in the month the board approved a three-year contract stating that when Sioux Falls teachers get raises, so do their bosses.

This school year, all employees will see a 2.75% salary increase, but when administrators make an average of $76,000 more annually than teachers, that raise goes further for them.

But when you look at the salary increases from last year (they are approved by the school board in July) in the graphic below I created from the district’s salary data, you will see another story. Many administrators are getting massive wage increases right after they approved a $300 million dollar school bond. Here are the entire PDF docs of salaries; 2018-19, 2019-2020

“The city of Sioux Falls, the county, Sanford Health, Avera Health, it’s just kind of the way it works,” said former board member and current administrator Doug Morrison said of the district’s salary schedule. “So everyone can aspire to have a pathway to what they want to be in life.”

The problem(s) with Morrison’s statement (there are several) is that the SFSD is NOT a private corporation or private non-profit, it is a taxpayer funded entity, and our taxes are going through the f’ing roof!

Mickelson would not explain the issue further, but suggested administrator pay be set year-to-year based on performance and the financial condition of the school district instead.

However, district officials say the blanket percentage increase and not seeing the contract’s details beforehand is common practice, something that’s been ongoing for about 20 years. 

Whoa! Cynthia and I agree on something. At least Todd Vik (the business manager) admits to the secrecy and backroom deals. Someone told me recently that they overheard Alberty (who just left the board) say in reference to the Sioux Falls City Council’s very public airing of grievances that the school board makes decisions behind closed doors before the public meeting so the public can’t see the sausage being made, so to speak. Well isn’t that nice?!

Vik acknowledged the percentage allocated for increases to teacher salaries has consistently also been tied to administrative salary increases, except for four occasions. 

District officials also said the average increase isn’t as large as it seems on paper, and includes those moving up the steps of a set salary schedule.


“A wage gap is accurate, but disparity, if I were to look up the definition, that would say to me our teacher salaries are growing by a less percentage than our administrators,” Alberty said about his May vote Wednesday. “But it’s tied to the teachers increases get and that’s not a disparity in my mind at all.”

Really? The data below tells a different tale Mr. Vik and Mr. Alberty. Administrators are getting rich while the taxpayers are getting screwed.

In the graphic, the RED DOTS denote who got a raise over 2.75%. In fact out of 68 employees listed, 42 got more than that. I also listed the percentages they received. You will also notice that job titles are NOT listed, it is that way in the data the SFSD has listed.

UPDATE: Using Entertainment taxes for private entity setting a bad precedent

I first want to say I support finishing the State Theatre, I have actually helped with some charity fundraisers for the facility through ZombieWalk and SF Roller Dollz. I think it is a worthy cause and I applaud Denny Sanford for giving money to the goal of completion. But I think that is still the direction the theatre should move in, private donations for a private facility.

Using entertainment taxes sets a bad precedent, as I pointed out yesterday, and I will tell you why.

Seven years ago, former city clerk Debra Owen won an open meetings case over how her termination was handled. During the proceedings, City Attorney David Fiddle-Faddle argued his case based on the opinion of a former attorney general. 4 of the 5 attorneys who sat on the Open Meetings Commission contended that an ‘opinion’ of an AG is NOT case law, so it did not apply. When Fiddle continued to argue based on the AG’s opinion, one of the panelists asked David cynically, “You do understand that the opinion of a AG is not the same as case law? Don’t you?” The crowd in attendance let out an audible giggle. The commission determined that you have to base your arguments on tried case law, not opinions.

The City of Sioux Falls is trying to say they can spend the entertainment money on a private entity in the form of promoting the city based on a opinion of the AG in 1984. But there is NO case law. In other words, the city could be sued if they try to set this precedent. Even if I supported giving the State Theatre MORE tax money, which I don’t, it should come out of the CIP not the entertainment tax.

Listen to Allison Weiland talk about the State on Jon Michael’s Forum

In other news, Cameraman Bruce attended a luncheon today talking about open meeting laws, 3 of the panelists were former State Legislator Dave Knudson, Argus reporter Jonathan Ellis and Jon Arneson (Argus attorney). They all contended that the most recent open meeting laws that Knudson helped write, said that if text messaging or emails during a public open meeting are being used, that correspondence can be used in a court case. So council, if you were smart, you would put the phones and email chatting away during the meetings.

Welcome to Opt-Out Falls!

Well, it was bound to happen, with ALL of our local government agencies in Sioux Falls going Bat Sh*t crazy over opt-outs, the name change is no surprise.

“I will admit I was a little surprised and kind of hurt when I found out the name change,” local philanthropist Lenny Spamford exclaimed, “I mean just how much does a no state income tax paying billionaire in SD have to give before he gets a town named after him?”

The governor, Donita Trump, didn’t seem too bothered by the change either, “I guess we kind of forced it on them, you know, by collecting over 30% of our sales tax revenue from the city and giving them nothing in return. It may not seem fair, well because it isn’t. I told you I would do things differently, and I’m delivering on that promise. Talk to you later, I have to get back to trucker hat shopping and hip-hop dance lessons.”

The latest to opt-out was the Minnerahrah County Commission today voting 6-0 for an opt-out (and 5 of them are Republicans! The shame!).

“The county, especially Sioux Falls has become the place to commit crimes, it’s like it’s trendy or something to drive from Freeman, or Menno or even Highmore to commit crimes in our county,” said county commissioner Gene Bart, “We really enjoy arresting people here and putting them in the endless cycle of the criminal justice system. Heck, just yesterday we arrested someone for looking at the Arc of Dreams the wrong way, on top of that we even put a guy away for trying to burn the newly sodded grass at the Levitt with a magnifying glass. Lawn crimes, just another mole we are trying to whack! Building collapses, not so much.”

Of course nothing gives the Sioux Falls School District more jollies than an opt-out. Superintendent Baron Von Maulher said, “We were getting such a kick out of it, I banned joke books from the IPC. Whenever I see anyone down and out around the offices, I just yell ‘OPT-OUT’ and the whole place breaks out in laughter. Of course, the finance department does get a little trepidation, because they have to ‘count’ (wink, wink) the votes. I always tell them they can do that with their hands tied behind their back and blindfolded. Worked in the school bond election.”

I asked Baron what the opt-out schedule looked like for the school district over the next 5-10 years.

“Well, since Pierre really doesn’t care how much we raise taxes, we figured we would push the envelope a bit,” Von Maulher replied, “We are going to try 6-12 opt-outs per year through the board, and if the people whine about having a choice, we will hold an election, but this time there will be only ONE super precinct, and it will be in my office.”

The city council is also infamous for raising property taxes. In fact, I don’t think a city council has voted down an increase in over 15 years.

City Council Vice Chair, and RS5 self-appointed leader, Ned Greitzert explained it like this, “When someone hands you lemons, you make lemonade, when the state hands us an opportunity to raise the tax rate, we make grenades, uh, I mean lemonade.”

Well, that would explain the potholes.

I asked him about all the other numerous increases in fees and taxes the city imposes on the citizens, and couldn’t they just take it a little easy?

“Funny you bring that up,” replied Greitzert, “The majority of the council, the ‘RS5’ as we like to call it, or the ‘He-Man Steely Hater’s Club’ is all about positivity and progressive measures to keep our city’s high level of quality of life at a maximum, that means if we are going to raise fees on water, sewer and other stuff, we have to keep that tradition of caring  and due diligence with property taxes. Wouldn’t it seem odd to you that your water bill went up last year but your property taxes didn’t? Where’s the consistency there? If you want inconsistency with taxes, just vote Steely for mayor. All she’ll do is bankrupt the city while giving taxpayers a break. The next thing you know, we will all be swimming in an outdoor pool in the middle of January.”

I didn’t have the heart to tell Ned that I didn’t know how to swim, especially under ice.

Some question why all the local entities have to constantly raise our tax rates when valuations have had record growth over the past 6 years?

Mayor TenBibleverses’ Chief of Staff took a stab at the question, “I call it the candy syndrome, something I kind of started when I worked for that last crook, I mean, mayor and quit ONLY after I was forced to write the largest TIF in city history for the Spamford Sports Complex,” said Jericho Speck, “We just started handing out TIFs, tax rebates, excusing tipping fees, ignored environmental laws, built millions in infrastructure for ice cream warehouses and just said, screw it, corporate welfare for whoever wants it. Don’t tell my pastor.”

I asked, “The Candy Syndrome?”

“Yeah,” Speck said “Whatever rich developer in town that needs a handout for NO reason at all, we just give it to them. No questions asked. No proof of economic impact. No proof of job growth, or even good paying jobs. We just make sure the request is signed and we approve it. The city clerk’s office handles petitions in a similar same way.”

I wondered if this haphazard way of giving tax cuts and tax incentives was driving up everyone else’s property taxes.

Speck responded, “What? Are you stupid? Does beer like foam collect at the bottom of Falls Park every Spring for the past 100 thousand years?! You certainly are the poster child for the large percentage of South Dakotans that don’t go to college. Ever think about taking up welding? There’s a program I could refer you to.”

I had more questions, but I had to get back to my call center job, my 8.5 minute break was over.

While this was satire, some of the sh*t is true, mostly everything but the fake names.

West River math VS. East River math

So this is an interesting story;

RCSD – $250m – $20/month increase in property taxes on every $100,000 of value  =  $240 yr
Morrison/Vik/Maher MATH:
SFSD – $190m – $2/month increase in property taxes on $100,000  =  $24 yr
So which finance director is telling the truth?
I do know that the SFSD rearranged their capital outlay levees, but the disparity is strange. I also wonder if they plan to pay off the bonds a lot faster in RC?