City fees could get fresh look under new plan

The city of Sioux Falls could start taking a more regular look at fees charged to individuals and businesses.

The conversation came up as the city was forced to recalibrate its budget in recent years because of  declines in revenue.

“This is a much bigger topic than I think we maybe originally anticipated,” director of finance Shawn Pritchett told the City Council on Tuesday. “We needed more of a strategic way of looking at these fees.”

The first step is to build consensus around a framework for how to think about fees, he said.

Taxes support broad-based services like police and road construction. Fees come in to create balance and better identify individual benefit to the person paying for a service.

“You may not look to get full cost recovery,” Pritchett added. “This conversation is really not about revenue recapture but about setting fees at an appropriate amount that’s reasonable and easy to administer for the city.”

Current examples of fees include building permit fees, pool passes and costs to use the city’s clinic. Fees don’t always cover the total cost of the services such as with pool passes.

“Right now, we do charge fees, but they don’t cover the full cost and freight of operating those pools, so the city has made a policy decision that it wants to subsidize some of that in allowing people access to pools,” Pritchett said.

“What is the community benefit of children being able to go to those pools and being redirected from other things they might be doing at that time?”

There also are conversations about whether nonresidents should pay different fees from residents, he said.

The city also recently set a set of regional communities to use for comparisons, including with fees:

• Cedar Rapids, Iowa
• Des Moines
• Fargo
• Fort Collins, Colorado
• Fort Wayne, Indiana
• Grand Rapids, Michigan
• Madison, Wisconsin
• Overland Park, Kansas
• Lincoln, Nebraska
• Rapid City

“This will provide a good basis for us,” Pritchett said.

There also could be a look at adjacent communities, including Brandon, Harrisburg and Tea.

“We want to make sure that we remain competitive,” Pritchett said, adding that there can be options for free and reduced fees for low-income populations or children.

The goal is to reach a point where city fee increases are reasonable and steady over time, he said.

“The challenge we have is some of these fees maybe haven’t been touched in 15 years,” Pritchett said, adding that with utilities such as water and wastewater there have been gradual, consistent increases “so people aren’t shocked.”

The city is recommending reviewing fees for planning, health and fire this year, in addition to public parking. Those fees including the cost of inspections, licenses and citations. They likely won’t come to the City Council for approval until this fall, Pritchett said.

Enterprise utility fees would get a new look next year, while parks and library fees would be evaluated in 2028. The cycle would wrap up in 2029 with police, attorneys and streets.

“It would get us into a four-year rotation where we’re consistently looking at these fees,” Pritchett said. “We shouldn’t be so inflexible that we’re not going to address things as they (come up), but this just puts a standard in place that we continue to be thoughtful and intentional about bringing these forward.”