SIOUX FALLS, S.D. (KELO) — Even in a $539.6 million budget small amounts of money get attention.
Mayor Paul Ten Haken’s budget includes $259.6 million in the operating budget or general fund budget, $235.6 million in the capital improvement budget and $98.4 million in the internal services budget. Ten Haken recently announced the proposed budget and the council had its first budget hearing on Aug. 4.
The operating budget is what pays for services such as police and fire. The capital improvement budget is for improvements to facilities. The internal service budget covers employee benefits, insurance, the city’s fleet and related items.
Percentages such as 1% or 2% or even an amount of $100,000 can make a difference in the budget.
The 2021 budget is set on the premise that the city will deposit about $1.5 million of the general fund budget into the general fund budget reserve, said Shawn Pritchett, the city’s director of finance.
The city has contributed about $1.5 million to the reserve fund each year over the past several years, Pritchett said.
The city also takes about $4 million from the reserve fund every year for the budget, he said.
City council policy requires the city to have a mininum of 25% of the general fund budget in reserve.
Also, “You can’t spend every last dollar (in the budget),” Pritchett said. So, city officials work with a budget knowing that 1% to 2% of the general fund budget will remain unspent at the end of a fiscal year.
“You can’t fall behind 1% otherwise you are at risk of overspending your budget,” Pritchett said.
One percent of $259.6 million is $2,596,000.
In contrast, the proposed budget cuts about $112,000 in funding to the Sioux Falls municipal band.
Pritchett said the proposed cut would mean the city would not fully fund the band. The city needs to examine all expenses to determine if they are still appropriate, he said.
The city needs to provide significantly more money toward the Metro 911 program and the new emergency response triage center at the same time it considers funding to smaller programs, Pritchett said.
“It’s a good conversation point,” Pritchett said.
Does the city need to continue to fully fund the municipal band or are there other sources of funding to cover it or supplement any city money, he said.
The city band is fully funded from the parks and recreation budget.
The parks and recreation budget will realize a cost savings this year headed into 2021. Pritchett said as of Aug. 6, the savings is about $1.7 million and could reach $2 million. Most of the savings is in personnel costs, he said.
The city did not open outdoor pools and did need to hire staff. Also, the city did not hire as many seasonal part-time workers for the overall parks department, Pritchett said.
Personnel is one of the largest expenses in the general fund budget. The 2021 proposed budget includes $124.9 million in wages and benefits. Most of the personnel costs are in public safety which has 41% of all personnel.
The overall budget has earmarked money for 24 new positions. Twenty of those are in the police department or fire department. Public safety positions are funded from the general fund. The four other positions are in enterprise funds such as utilities, which pay for the positions.
The total cost of those proposed positions is about $2.1 million, city human resources director Bill O’Toole said at the Aug. 4 budget hearing.
While adding positions can increase the city’s budget, it’s also where a city can save money.
When the city expects that 1% to 2% of a budget will be unspent at the end of a year, part of that savings can be because of unfilled positions, Pritchett said.
An employee may decided to retire which wasn’t in the budget plan,or a department may not yet have successfully filled all open positions, Pritchett said. Those are not deferred hirings or cut positions.
The city can also save when repairs or maintenance is not completed before the year’s end. Pritchett said those situations aren’t planned but happen because factors change which delay a repair or project until the next year.
The proposed 2021 budget also includes a strategy that individual departments would not be making significant changes to their budgets in programs or adding personnel, Pritchett said.
The city’s business analysts work with departments on their budgets including this year’s premise to maintain baselines for 2021, Pritchett said.
The proposed 2021 budget was also planned during the coronavirus pandemic.
Pritchett said while sales tax revenue was negatively impacted by the pandemic, there are signs of recovery. The recovery and an already stable financial position mean the city will be in good financial shape for 2021, he said.
The city has a budget hearing on Aug. 11 which will be followed by other hearings before the council takes formal action later this year.