Mayor Steve Allender recently made his 2018 budget proposal to the Rapid City Council. The budget continues last year's priority-based budgeting, a system where the budget is based on the cost of services and the value they provide to the community. The Rapid City Journal reported on some of the mayor's concerns, including the city’s reliance on sales tax for most of its revenue.
Rapid City’s sales tax has remained relatively stable, and increased slightly in recent years. For Calendar Year 2016, Rapid City generated $59.6 million in sales tax, the same amount the city generated in 2015, when adjusted for inflation. In 2014, the city produced $57.4 million in sales tax (in 2016 inflation adjusted dollars).
Currently, sales tax comprises 43 percent of Rapid City’s budget. The second largest contributor to the city’s revenue is property tax, with the remaining portion comprised by a revenue gained through fees and permits. In order to mitigate some of the city’s reliance on sales tax, Allender suggested that city fees could be increased, as many had not changed in 25 years. If the fees were keeping up with inflation, a $10 fee in 1992 would have been $17.11 in 2016.
Mayor Allender has also suggested a reallocation of the city’s sales tax. Today, the two percent sales tax is allocated into four funds: .92 percent toward the General Fund, .16 percent to Utility Support, .46 percent to the Capital Improvement Plan and .46 percent to the Vision Fund. Under the mayor’s proposal, half of the sales tax (or 1.0 percent) would be allocated to the General Fund, .58 percent to the Capital Improvement Plan, and .42 to the Vision Fund. Proposed allocations for the General Fund for 2018 can be viewed in the chart below:
The mayor’s 2018 budget proposal also calls for funding reductions to several programs. Under his proposal, funding for the Retired Senior Volunteer (RSVP) program would be completely eliminated, while the Journey Museum’s funding would be reduced by $30,000. The Human Services and Allied Arts Fund Community Investments would also be reduced by $52,000 and $27,000, respectively.
The Rapid City Council will discuss the budget further on August 15. The budget requires approval at two separate council meetings.