$45M Cut From Sioux Falls Infrastructure Plan

Jun 28, 2017

The mayor of Sioux Falls says slumping sales tax revenue prompts him to cut the city’s capital improvements budget by more than $45.2 million. The plan broadly covers infrastructure like roads and buildings. The CIP is a rolling roadmap. The method allows leaders to adjust for different economic circumstances while planning for the next five years.

Bold black letters flash onto the projection screen at Tuesday afternoon’s capital improvement plan presentation, "Tough but necessary choices have been made."

"We’ve got no choice. The trend lines? They truly do tell a story, and they’re not getting better," Mayor Mike Huether says.

Huether says Sioux Falls collects significantly less sales tax revenue than financial planners estimated just one year ago. Last summer, city leaders predicted Sioux Falls could see five percent sales tax growth from 2018 to 2022. Now revised growth projections prompt $45.2 million in cuts to infrastructure improvements.

"We are recommending that we move the construction of the new fire station to 2020 versus 2019," Huether says. "Our police range where the women and men of police practice their firearms, we had a roof baffle system that we’ve completely removed now from this plan."

Credit City of Sioux Falls

The capital improvements plan also purges planned spurs along the city’s bike trail and eliminates or scales back park development projects.

Chairman Rick Kiley leads the Sioux Falls City Council.

"Our parks are our crown jewel. They’re wonderful, and I think we can make due as citizens with what we have for at least the next five years and continue to invest, in a prudent manor, within our infrastructure," Kiley says.

"Well, obviously roads are always a very popular item with the citizens where they like to see money going that direction because there are still some areas that need attention there, and they will get that," city councilor Marshall Selberg says.

Selberg approves of the mayor’s attention to the city’s backbone – roads.

Mayor Mike Huether says streets take priority, even though transportation projects endure cuts. The budget funds repairs for 100 fewer blocks. An extensive study of city streets identifies thoroughfares that need work. Instead of all of the recommendations, Huether’s plan covers 85 percent of suggested construction next year.

"And the question has been, ‘So when are you going to get them fixed? When are they all going to be improved?’ We put together a plan that will have all of those street that have been rated very poor, they will all be improved by the end of 2019," Huether says.

Despite the reduction, Huether dedicates 90 percent of capital improvement dollars to roads and utilities. That translates to $189 million for water and water reclamation projects and $241.7 million for streets.

Credit City of Sioux Falls

He argues the move does not jeopardize quality of life. He says, since 2010, Sioux Falls invested $205 million in projects that aim to improve experiences.

"The brand new Denny Sanford Premier Center, the brand new Midco Aquatic Center, the brand new River Greenway," Huether says. "The brand new Sanford Sports Complex, the brand new Prairie West Branch library, the brand new parks all across our city, eight of them in total."

Huether’s budget estimates show $548 million in revenue over the next five years. In that same time frame, he says the city should spend every dollar of it.

Huether applauds leaders for managing debt. Per capita debt is $1,920 in Sioux Falls; Fargo, North Dakota has $5,277 in debt per citizen.

Kiley says leaders who need to balance local budgets have to face the reality of slumping sales tax revenue.

"This mayor and the city council – especially the mayor and his team – have identified cuts even for this calendar year and are, as we speak, implementing those cuts, too, to make sure that we’re living within our means," Kiley says. "So I think it’s just something that we’re going to have to weather as long as necessary."

Kiley says he expects few changes to the mayor’s capital improvement pitch; he says little fat exists to trim. Council member Marshall Selberg says he agrees that the mayor generally cinches the financial belt in the right places.

"As far as specific items that we get into, you know, the budget address will be in a couple of weeks, and then we have a good six weeks to two months where we really focus kind of on item-per-item, and I’m sure we’ll discuss that more as we go along, but overall the outline of it makes sense so far from what we see," Selberg says.

Sioux Falls Mayor Mike Huether attributes the dip in sales tax growth to struggling agricultural conditions, low inflation and increasing online sales. He also points to difficulty collecting revenues.

Councilors receive the mayor’s recommended operating budget in July. They vote on final numbers in September.

View the full capital improvements plan for 2018-2022 at this link.