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When the Rapid City Council shot down proposed fee hikes for city building permits as part of Mayor Steve Allender’s 2019 budget, the city’s projected 2019 revenue was sliced by $203,000.

That decision, made at an Aug. 28 council meeting, meant $203,000 in 2019 city expenditures would also need to be slashed. At the time, Alderman Jason Salamun predicted what the subsequent cuts might look like.

“I’m warning us that there are going to be some sacred cows that we may have to slaughter,” Salamun said on Aug. 28.

City funding for the Cornerstone Rescue Mission, it turns out, has become that sacred cow.

The subsidy’s start

In 2017, the city contributed $250,000 to the Mission, the first ever general fund subsidy to the organization. In 2018, the contribution dropped to just over $170,000. The 2019 budget originally planned to keep that contribution level the same before the building permit fee hikes were squashed. Now, the proposed contribution has dropped to $100,000.

In a Sept. 13 letter to the city council and Allender, Mission Executive Director Lysa Allison said the overall, $203,000 decrease “disproportionately shifts the funding deficit squarely on the Mission” and “would mean more homeless people out in the streets.”

“With record numbers of people staying at the Mission, now is the time for the city to increase its support, not pull away,” Allison wrote.

Prior to 2017, occasional Community Development Block Grant awards to various Mission projects were the extent of city financial assistance to the Mission. But after a five-year contract between the Mission and Veteran’s Administration (VA) ended in 2016 and was not renewed — the VA paid the Mission about $160,000 annually to maintain a veteran’s drop-in center —  the Mission was left with a shortfall.

“In 2016, we cut our staff, expenses and services to the bare minimum and continue to operate that way,” Allison wrote in the letter. An increased demand for services and other financial burdens also contributed to problem, Allison said in a Journal interview Friday.

Still, the original 2017 contribution came at the behest of Allender, not the Mission.

“Having a mission that will take nearly everyone is a huge benefit to city,” Allender said in an interview Friday. “Without them, the city would be compelled to build its own shelter in order to keep homeless people from dying from the elements or other conditions. I believe that, ethically, it was the responsibility of the city to contribute to the Mission and that resulted in the first contribution of $250,000.”

Fewer dollars, higher demand

Without the VA contract, the Mission continues to operate on a tight budget funded primarily through small federal and state grants, in-kind donations of time and food, donations from individuals and area businesses, and the city’s diminishing subsidy. Allison said the Mission’s 2018 budget was about $1.7 million and paid for the organizations 52 full-time employees and five part time employees who staff the men’s shelter on Main Street and the women’s and children’s shelter on Fox Run Drive every hour of every day of the year.

Cuts to Mission staff and services like case management would likely bear the brunt of the proposed financial cuts, Allison said.

“Realistically, [it will impact] how many people we can serve,” she said. “We are the last stop so we end up taking them in because there’s nowhere else to go. The needs continue to increase.”

In city hall, the demand for services is also putting a strain on the city’s budget.

“The budget struggles we’re going through are not the sign of a lack of funding or some kind of financial crisis,” Allender said when asked why, in a year of solid national economic growth, Rapid City's budget still seems to be in a bind. “It is the result of conflict between the demand for city services and our willingness and ability to provide them.”

Aside from building permits, Allender’s administration has successfully pushed through increases in water rates and a myriad of other service fees from city pools to food truck vending operations. Without those increases, Allender said the city would be unable to provide every service it has in the past. He cited multi-year contracts with unions that guarantee annual wage increases, regardless of the city’s financial situation, as an example of how the city’s “business model is not as smart as a successful private business model.”

“There are decades where that was never a problem,” he said Friday. “But when the margins get as tight as they are this year, that’s a big problem.”

In a recent meeting, Allender took some of the blame for those union contracts and on Friday, said he regretted presenting the building permit fee hikes along with the budget.

“My mistake was presenting the building permit proposal at the same time as the council and believing the council would vet that proposal separate of the budget,” he said. “What I experienced was more of a knee-jerk reaction to the proposal [by the council] and the initial wave of the home builder lobbying efforts were effective, so that got us derailed early.”

The result?

“I cut the items that I was hoping not to cut,” he said.

Feeling singled out

In Allison’s letter to Allender and the council, she noted that decreases to the Mission far exceeded proposed cuts to any other organization and requested that city leaders “look at other funding cuts or at least make the cuts more equitable across the board.”

Allender said he and city staff has already done that in meetings prior to the hearings, when they collectively worked to cut city department budget requests by $1.5 million. Any further cuts would begin to effect essential city servcies, he said. 

He also characterized calls for cuts to other organizations such as the Black Hills Humane Society as an apples-to-oranges comparison since the Humane Society works on a contractual basis for the city by providing animal control and shelter services. In the 2019 budget proposal, the city expects to pay the Humane Society $304,817.

No silver bullet, for now

As for whether the county’s Care Campus, set for its grand opening Sept. 24, was considered as potentially lightening the load of the Mission and reducing the need for funds, neither Allender nor Allison said they believed it would have much effect.

On Sept. 17 at 6:30 p.m., the council will consider the total budget, proposed cuts and, perhaps, make a final decision. Allender said it was not something he was looking forward to while predicting the meeting would be “very dramatic.”

He also sounded less than optimistic that any solution would be found to the problem.

“It’s nothing that can be expertly corrected by ten policy makers from the dais,” he said of the council. “This is just the situation we’re in.”

The possibility that online sales tax collection monies may make up for the shortfall also isn’t something Allender, or anyone in City Hall, is banking on.

“Well, I certainly hope so,” he said. "I wouldn’t bet a nickel on it, though.”

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Contact Samuel Blackstone at samuel.blackstone@rapidcityjournal.com and follow him on Twitter or Facebook @SDBlackstone.

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City Reporter

City reporter for the Rapid City Journal.