Armstrong, Lewis chosen for city council leadership (copy)

The Rapid City Council on Monday approved Mayor Steve Allender's budget proposal for 2020.

All 10 members of the council voted to adopt the budget with little discussion.

At approximately $175 million, the city's total operating budget for 2020 grew 5.7 percent from 2019. Approximately $61.6 million of that figure will be budgeted for general fund expenditures — up 2.1 percent from 2019 — which include some Rapid City government offices and public safety services.

As in years past, the police department will be the greatest expense to the general fund. Approximately $15.8 million of the general fund will go toward the agency in 2020, up 1.4 percent from 2019. Public safety, which includes the fire department, will account for 48 percent of general fund expenses.

The remaining $113.5 million will be administered to a host of different city offices and funds, some of which support entities that generate additional revenue of their own, such the Rapid City Regional Airport and the city Solid Waste Division. 

Funding for the arts will increase next year to approximately $700,000 — or 1 percent of the general fund — although the city will set less money aside for the Allied Arts Fund, a local arts fundraising organization. The arts contingency fund that the group manages for the city will receive $75,260 in 2020, 24 percent less than in 2019.

Along with funds it raises independently, Allied Arts donates money from the fund to a total of 16 visual, musical and performing arts groups in the area. Members and affiliates of the group previously spoke out against the cut to little avail.

The council kept steady the proposed 23 percent cut to the city's economic development fund, which will receive about $250,000 worth of general fund money in 2020. Allender has said that allocations to the fund will likely continue to decrease annually as Elevate Rapid City, a local group with a five-year goal of creating 5,000 jobs and attracting $300 million in new business investments, continues to grow.

The budget approved Monday also projects that the city will take in approximately $66.9 million in general fund revenue in 2020, up 2.08 percent from 2019. Sales tax revenue is expected to account for approximately 44 percent of that figure at an estimate of $29.4 million, up 0.65 percent from 2019.

With the council's approval of a 2.4 percent increase in property taxes last month, the city is projecting property tax revenues to total $18.7 million in 2020, up nearly 6 percent from 2019. Assuming that Pennington County property valuations stay at their current level, that increase could amount to a tax of approximately $7.37 on every $100,000 that a property is worth, according to the city Finance Office. City Finance Director Pauline Sumption previously said that because property values are expected to increase, which will affect the county's tax rate calculations, residents and property owners are likely to pay less than that amount.

What affect the increase will have on the average property tax bill will not be clear until after Pennington County completes its annual property assessment on Nov. 1.

Rapid City will still suffer a loss of $700,000 in state funding next year and $1.4 million the following year due to the repeal of South Dakota's internet service tax, which will take effect midway through 2020. Supporters of the repeal, which is mandated by a 2016 act of U.S. Congress, have said that South Dakota's tax on internet sales will make up for any losses it incurs.

South Dakota only began to tax internet retailers and e-commerce platforms such as eBay in November 2018. The state Department of Revenue has so far declined to say how much revenue the internet sales tax could create.

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— Contact Matthew Guerry at matthew.guerry@rapidcityjournal.com

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