Simplified: It’s budget season for the City of Sioux Falls, and one decision councilors will make is whether to include a 3% inflationary increase to property taxes collected for the city.

Why it matters

  • Property taxes fund about 37% of the city budget — with the rest funded by sales tax and other revenue. Those taxes go to support general operations from snow removal to parks to the library to public safety.
  • Only about a quarter of the property taxes you pay go to the city. Over half goes to your local school district and the remainder goes to the county.
  • Each year, the city council must vote on whether to increase its slice of the property tax pie to help keep up with inflation. The state caps this increase at 3%, so even though inflation is higher, the city cannot increase property taxes collected at a higher rate than that.
“We don’t have to take it but we’d be silly not to because you’d just have to pay for it down the road,” Finance Director Shawn Pritchett said.

How are property taxes calculated?

Each government entity that makes money from property taxes has an annual levy. That levy is then applied to the assessed value of your property.

  • So, for example, the city in 2022 had a levy of $3.89 per $1,000 in taxable valuation of your property.

If you have a house valued at $300,000 (keeping in mind that’s the value assessed by the county) then you would've paid $1,167 in property taxes to the city.

  • With a proposed 3% increase, your taxes would go up about $35 per year.

It doesn't sound like much for one household, but in total it'll bring an estimated additional $2.4 million into the city budget for next year, Pritchett said.

  • That's enough money to patch every pothole in town or to fund all part-time wages for pool and park programming.

What happens next?

City Council will continue budget discussions over the next several weeks before voting on a final budget for next year in September.

  • As part of budget discussions, the council will vote on whether to take this 3% consumer price index increase on the city's property tax levy.