Sioux Falls residents could face 3% property tax increase in 2023

Published: Sep. 7, 2022 at 3:10 PM CDT
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SIOUX FALLS, S.D. (Dakota News Now) - Sioux Falls residents could be facing a property tax increase next year.

The proposed 2023 budget for the city of Sioux falls calls for a 3% property tax increase due to inflationary costs.

The money from property taxes goes towards basic operating expenses such as clearing snow from streets, public safety salaries, and maintaining parks.

“It’s really important that we have that steady income so we can provide services that people expect,” Sioux Falls City Councilor Greg Neitzert said.

Sioux Falls City Finance Director Shawn Pritchett says each year the budget contains a property tax increase. In 2022 it was 1.2%.

“We try to make small adjustments every year, so people don’t feel big adjustments down the road,” Pritchett said.

Pritchett says not including that adjustment in the 2023 budget would have a significant effect on next year’s city funding, as well as future budgets.

“It causes a structural deficit for the city in the long-term,” Pritchett said. “So, you’re not just giving up those funds in one particular year and creating a band-aid fix, you actually lose those funds every year going forward, and so you can’t necessarily make those up.”

Pritchett says the tax increase costs the average taxpayer a few dollars a month, but it adds up to more than two million dollars per year for the city.

Based on the graph below, the city’s general fund reserves would fall below the policy threshold of 25% within ten years without the property tax increase. And, budget cuts elsewhere would be required to make up the difference.

This graph shows the impact of not including a property tax increase in the city of Sioux...
This graph shows the impact of not including a property tax increase in the city of Sioux Falls' budget for 2023.(City of Sioux Falls)

It’s something City Councilor Pat Starr thinks can be done.

“Our budget isn’t that tight that we have to raise property taxes,” Starr said. “Property taxes are a small part of our overall budget, and we’re funded primarily through sales taxes.”

Starr voiced his opposition to the increase at Tuesday night’s city council meeting.

“It’s difficult at this time when we have hyperinflation and maybe the prospects of a recession, and at the same time, we go to the public and say we just need to raise your taxes because city government needs to be in a better financial position.”

The proposed tax appropriation portion of the 2023 budget was moved forward Tuesday with a 6-2 vote, with Starr and City Councilor David Barranco voting “no.”

The final adoption of the 2023 budget will be considered at next Tuesday’s Sioux Falls City Council meeting.