The Sioux Falls City Council held an informational meeting on July 15, 2025, focusing on the city's financial projections and the implications of recent legislative changes on property tax growth. The primary discussion centered around adjusting property tax growth estimates from a previous range of 3.5% to 4% down to a more conservative 3%. This adjustment is significant as it reflects the impact of new legislation that allows homeowners to make improvements of up to 40% without those improvements being counted as growth for tax purposes.

City officials presented calculations indicating that this reduction in growth estimates could lead to substantial revenue losses for the city over the next decade, potentially reaching $26 million. The financial implications are expected to affect the city's general fund reserves, which could dip below the targeted 25% threshold as early as 2029 if adjustments are not made.

The council also discussed the variability of sales tax revenue compared to property tax revenue. Sales taxes are more susceptible to economic fluctuations, making them a less stable source of funding for city services. The city relies heavily on property taxes for consistent revenue, which helps in planning and budgeting for essential services.

In response to questions from council members, city officials clarified that while the state has enacted legislation affecting property taxes, the city has limited authority to impose taxes on new sectors, such as cannabis, which remains a topic of interest but is currently not taxable under state law.

Overall, the meeting underscored the need for budget recalibration to align expenditures with anticipated revenue growth, emphasizing the importance of proactive financial management in light of changing economic conditions and legislative impacts. The council is expected to continue discussions on these financial strategies in future meetings.