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Mitchell work session outlines budget timing and sales-tax risk from proposed state ballot measure
Summary
City staff reported midyear revenues are roughly on target but slower growth; council discussed a state-initiated measure to remove sales tax on groceries/consumables and the risk that cities could lose the ability to collect that revenue.
City finance staff presented a midyear revenue update and councilors spent substantial time discussing a statewide initiated measure that could eliminate state and therefore municipal sales tax on groceries and broad “consumables.”
“We are on target to hit our projected revenue budget for sales tax in 2024,” Speaker 4 said, giving year-to-date figures and noting year-to-date growth of roughly 2.83 percent. Staff cautioned, however, that growth this year is slower than recent years and month-to-month variation is large.
Councilors flagged a pending initiated state measure that, if approved, would remove state-level tax collections on groceries and consumables. Speaker 4 said guidance from the South Dakota Municipal League indicates cities likely could not continue collecting a tax that the state no longer collects, and council discussed a statewide revenue impact mentioned in the session in the tens of millions.
Speaker 4 also reviewed local fiscal strength: the city’s reserve balance was reported at 67 percent of policy targets and officials described available constitutional debt capacity of about $47 million. Staff said the current budget includes a $3.5 million line for the Lake Mitchell drawdown and that last year the city collected roughly $14,000,500 in sales tax (as reported in the briefing).
Next steps: council will continue budget work sessions in September and review contingency plans and reserve use should the ballot measure pass; no votes were taken at the work session.
