Mayor’s proposed budget includes personnel investments in public safety, parks

Sioux Falls must strike a balance between dealing with inflation and the rising cost of doing business while spending what’s needed to remain a city’s that’s “investible,” Mayor Paul TenHaken said

“A place where people want to live, work, play and visit.”

TenHaken’s proposed 2025 budget totals $781 million, down from $790.1 million in 2024 and reflective of an environment without federal stimulus dollars and with the backdrop of uncertain sales tax revenue growth.

At the same time, building activity is on track to reach $1 billion in valuation this year, and Sioux Falls recently was recognized among the top 10 best-run cities in America by financial website WalletHub, TenHaken noted.

“For some, the proposed 2025 budget and next five-year capital program may not appear to be transformational, yet I would argue that isn’t the case,” he said.

“Not only are we strengthening our daily operations and budgeting to meet the expected service delivery of our residents, we are also making strategic investments into our community’s future through land acquisition, aquatics bond payback and people. These investments are timely and thoughtful, and prepare for us to collaborate with the community on our continued shared growth.”

The city budget includes a $248.3 million general operating fund, up from $234 million in 2024. Revenue for that fund primarily includes sales and property taxes. The city’s Finance Department is forecasting 4 percent sales tax growth next year, while this year is tracking behind recent years at 3 percent.

The operating budget includes a proposal to add 28 full-time positions, representing $2.8 million in expenditures. It includes seven police officers — representative of a budget heavily weighted toward public safety, which represents more than $100 million in total investment between operating and capital expenses.

“Across the nation, municipalities continue to find difficulty in recruiting people to the public safety profession, especially law enforcement roles,” TenHaken said.

“We recently launched a recruitment campaign to help us proactively identify and recruit people who want to answer the call and serve their community in this noble profession. It is too early in the campaign to show data-driven success, but we are experiencing more inquiry into our open positions.”

Other proposed positions include a full-time position for Siouxland Libraries, which reflects a spike in visits to the Oakview Branch, two administrative positions for the Parks and Recreation Department that reflect its growing areas of responsibility, three Parks and Recreation positions to support Jacobson Plaza — the new downtown ice ribbon, playground and splash pad — and five positions to support the acquisition of the west-side Sanford Wellness Center.

“We didn’t arrive here by happenstance,” TenHaken said.

“This has been an intentional process, years in the making, to lead us to a thoughtfully created plan that addresses our community needs for both outdoor aquatics and indoor recreation.”

The capital improvement program at $295.7 million in 2025 and $1.1 billion through 2029 reflects an environment of increased costs for construction and equipment, TenHaken said. For instance, a fire station that was estimated at $3.8 million to build before 2020 now will be at least $6 million. Equipment cost increases have ranged from 40 percent to 80 percent since 2018.

“Inflationary pressures are not only impacting our purchasing power but also our ability to keep up with labor demands and the recruitment and retention of our full-time, part-time and seasonal team members,” TenHaken said. “While this is the first time during my term in office that we have not proposed an increase in the overall budget, we remain confident in our ability to prioritize effectively and continue providing the service our community expects and deserves.”

The capital plan is heavily weighted toward infrastructure improvements, including streets and utilities. Much of it is being driven by the South Dakota Department of Transportation investing more than $800 million in the Sioux Falls area between now and 2027.

“Based on this incredible investment, we have aligned our proposed capital program investments, specifically related to the construction of the arterial street network, to keep the state’s projects moving forward,” TenHaken said.

Part of the capital plan includes acquiring the approximately 8 acres near 10th Street and Cliff Avenue being called the Riverline District, envisioned for a future convention center.

“Acquiring this land is not a final decision but a step towards engaging the community in determining its feasibility and benefits,” TenHaken said.

“We have a great deal of analysis and work yet to do, and while not all details have been worked out, we will be asking this community if this is an investment they want to support and one we can make together.”

The 2025 budget proposal also includes additional investment in housing, totaling $12.5 million, which includes an additional $1 million supporting strategic housing initiatives. Since 2018, TenHaken said the city’s housing budget has increased more than 80 percent, or an additional $5 million annually.
“Our approach to housing is focused on partnerships and revolving investments,” he said. “This approach is smart and sustainable, bringing a balance to neighborhood revitalization and also helping us build new units.”

In 2023, the city’s housing team connected 2,562 individuals with resources and helped produce, preserve or rehabilitate 419 housing units.

The proposed budget also does not reflect the impact that potential approval of Initiated Measure 28 would have. The statewide ballot initiative would repeal the tax on all consumable goods.

“If voters choose to approve this ballot measure, our community would likely see a substantial reduction in sales tax revenue that would profoundly impact our budget, our ability to move critical infrastructure projects forward and our delivery of services to the public,” TenHaken said.

“Based on the way this measure is written, it would have multiple unintended consequences. Our team and other municipal partners across the state have been estimating the potential financial repercussions, and various every-day services would be greatly affected because of the impact to sales tax revenue.”

If sales tax revenue were to decrease, there is no legal mechanism at a local level to replace it, he added. Other revenue sources for the city include property taxes, charges for goods and services. and license and permit fees.

Looking ahead, TenHaken noted that the city has added 23,000 people to its population since 2019 — roughly the size of Brookings — with a metro area of more than 300,000. The city’s Planning & Development Services Department soon will begin updating a comprehensive plan looking out to 2050, he said.

“Demand for quality of life and jobs will lead to Sioux Falls growing in all directions, and it’s important, now more than ever, we continue to work with our neighboring communities on implementing sustainable growth models that contribute to the region’s holistic success,” TenHaken said. “The accolades and growth our community and region are experiencing do not happen by accident.”