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SF City Budget Booming, County Outlook Bleak

August 1, 2014, 5:04 PM by Ben Dunsmoor

SF City Budget Booming, County Outlook Bleak

The money is rolling in and the city of Sioux Falls is in great economic shape. That was the message from Mayor Mike Huether Thursday during his annual budget address. It's a different story just down the street where Minnehaha County Commissioners are struggling to fund crucial services in its 2015 budget.

South Dakota's current tax structure has been in place for nearly 20 years. The main source of revenue for counties is property tax. Cities also get property tax but the main source of revenue is sales tax.

"When I saw that the county was again very very strapped, not able to add new employees, and the city is putting on 34 (new employees) I thought, 'We really need to approach it,'" Rep. Anne Hajek (R) Sioux Falls said.

Previous Story: Growth Crunching Crucial County Services

Hajek is a former city council member and Minnehaha County Commissioner and has seen the disparity on both sides.

"I don't begrudge anyone but I think that we either have to look at the way the taxes are distributed or at the responsibilities," Hajek said.

To show the discrepancy here are the two 2015 budgets that were released this week.

  • Minnehaha County has proposed a $72 million budget for next year and can only hire one new employee. Commissioners denied requests for new deputies, prosecutors, and defense attorneys because of the tight budget.
  • Meanwhile the City of Sioux Falls is proposing a $149 million operating budget for next year and plans to hire 34 new employees.

Property tax revenue isn't keeping up with the growth in Sioux Falls - while at the same time sales tax revenue is pumping up the city budget.

Hajek believes state lawmakers need to take a hard look at the way taxes are distributed.

"I do believe it needs to get looked at from the legislature in terms of where is the money coming from? Where is it going to? What is the responsibility of each entity?" Hajek said.

Lawmakers rejected a plan last session to start addressing the issue. The Department of Revenue was the main opposition arguing that counties can increase revenue through opt outs.

But Hajek thinks the legislature needs to take a more long-term look at the city and county tax structure.

"It's ailing and it does need to be looked at in regard to the changes," Hajek said.

A legislative study was proposed for this summer on the issue but lawmakers chose to look into other topics at this time. The South Dakota Department of Revenue says it would assist with any long-term study lawmakers decide to undertake.

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