Tax Collection and Spending

This question has surfaced before. In fact, during the campaigns for the new Civic Center Arena in 2015 and 2018, it came up no less than 100 times. Answers were provided, but the question lingers:

This Two Cents ‘author’ is apparently frustrated that the City isn’t funding our school needs. So, why don’t we?

Here is the answer, again:

The school district is a taxing entity. The City is a taxing entity. The County is a taxing entity. They are not the same taxing entity. A breakdown of property tax distribution from Rapid City collections could be helpful in understanding this.

Of your total Rapid City property tax bill:

The School District receives – 50.19%  ($44,378,854)

The County receives for county service provision – 29.78%  ($26,331,984)

The City receives for city service provision – 20.04%  ($17,719,709)

These figures do not include special taxing districts such as those served by volunteer fire department etc. This distribution is a product of state law.

The City uses this $17 million, plus another $26 million from one-cent sales tax along with some fees and charges to fund:

  • Police, Fire, Parks and Rec, Street Maintenance including repairs, cleaning and plowing, Public Works Administration, Community Development (planning and zoning), Finance Administration, City Attorney, Human Resources, Mayor’s Office and City Council, City Cemeteries, Library and Information Technology services.

One taxing entity does not fund another taxing entity. Doing so would adjust the distribution percentage and would ultimately undermine the intent of the law from which the distribution was born.

The City Vision Fund, which will fund downtown lighting, is derived from sales tax. To be exact, 42/100 of a penny on each dollar. This results in annual revenue of upwards of $13 million – $6 million of that will be used annually for the bond payments on the new arena, leaving nearly $7 million available for community projects.

The point: The City does not fund the schools, just as the schools do not fund the City. It’s separate, on purpose and for a reason.

The other point: People visit Rapid City’s downtown all year long. Spending happens, life happens and our downtown, one of the things we are becoming famous for, did not happen by accident. Our downtown is the heartbeat of our community.  Our downtown, however is dark at night and has been described as “Gotham.” The downtown is undeniably a growing, thriving area of town and will benefit from new street lighting. We all benefit from a thriving downtown.

The Two Cents ‘author’ might incorrectly believe the lighting project will benefit only Main Street Square, but the lights will be placed from West Blvd. to East Blvd on both Main Street and St. Joseph St. and will light not only the current core of downtown, but also the growing and changing East of Fifth area.

Citizens who made up the Vision Fund Committee as well as the City Council itself determined the lighting project was needed, and I agree.

Downtown 1950s Downtown pumpkinfest2013

 

 

New Arena will Benefit Local Economy

Part One of Three: Economic Benefits of a New Arena

In just one week, we will know the outcome of the primary election and the future of the Rushmore Plaza Civic Center. On the ballot is an issue to authorize the City to bond for up to $110 million to build a new arena on the Civic Center complex.

A “yes” vote gives the complex new life and sets us on a course for larger and improved events, more economic impact and enhanced quality of life. A “no” vote, will place a Band-Aid on the Barnett Arena and will keep its current decline in progress. By my Arena Pro Formaestimation, in as few as 10 years we may be faced with the decision to infuse General Fund tax dollars into it, board up, or demolish the Barnett Arena. This would certainly close what has been historically a very popular, well-used and beneficial component to our community. A new arena will be financially self-sufficient and will not increase taxes.

To date, I have held a total of 57 presentations on the matter, and have spoken to over 2100 people face-to-face about this issue. I have come to learn that there are still sticking points and need a better explanation or justification. One of them is economics.

Rapid City is a visitor destination and we have been regarded as such since 1890. In Pennington County, there are 10,131 jobs that directly or indirectly exist due to the visitor industry.

In a 2017 scientifically-valid survey, Rapid Citians rated economic stability and growth as the number two priority behind Public Safety. Rapid City has little problem attracting visitors during the “on season” and since 46% of our general fund budget revenue is Survey Chartmade up of sales tax, we are left with significant reductions in revenue following the tourist season until Christmas and after Christmas until the beginning of tourist season. Rapid City doesn’t need to spend a great deal of time and energy trying to get more visitors here during June July and August. The off-months are the challenge and are historically the months when the majority of arena activity occurs. With the slow but steady decline in the usage of the Barnett Arena due to it’s outdated architecture, this is only making matters worse. A new arena, although never promoted as a ‘magic pill’, would certainly serve to bring visitors into our area in the off-season. Our visitors spend money, and a great deal of it. What’s more, the 10,100 people employed in full or in part by the visitor industry spend a great deal more money all year long.

A local economy is a closed system until it figures out how to bring in outside money. This can be done with exports such as manufacturing widgets to sell to people from other states or countries; it is done with agriculture when we export our livestock, farm goods and trees. This is also done with tourism, yet we don’t have to manufacture anything other than providing a welcoming destination for visitors from all over the world to travel. An economy only grows with outside money, it remains stagnant with the lack of it.

Building a new arena is a smart economic decision. It will benefit us all, even if we don’t attend events there. More sales tax revenue means less dependence on other revenues, such as property tax. It also provides more options for entertainment, recreation and quality of life.

Tomorrow’s topic: Parking

The Anti-Gossip Column

“Words have no wings, but they can fly a thousand miles”  ~ Korean Proverb

It should be no surprise to any of us: facts cannot easily be distinguished from fiction, after all, fiction is passed on at a greater rate than facts. Here are some recent Two Cents comments from the Rapid City Journal, and, my response:

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FALSE: A quick look around the nation tells us naming an arena after a mayor is highly unusual. Don Barnett is a man who led the charge for the original Civic Center complex and helped Rapid City recover from the 1972 flood. He was deserving of naming the current arena after him.  Naming the next arena will be a business arrangement, not a political one. Money talks, and we will be looking for advertising sponsorships.

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Great idea.  Wish we would have thought of that. A new manufacturing plant is being planned and construction will start this Spring. It will involve 10 acres of land, 100 jobs right away and 200 within a few years. We have a team of folks recruiting, incentivizing and helping to facilitate smart growth. The government cannot create jobs, but we can create an environment where jobs can be created. It’s not a matter of EITHER an arena or bringing in companies, we can have both. Also, don’t forget agriculture and tourism is who we are. These industries have helped Rapid City and South Dakota as a whole, become and stay successful.

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No one EVER said the building was about to collapse into a heap.  Yes, additions and improvements have been a part of the Civic Center complex.

Renovation history

Maintenance and upgrades are necessary in facilities such as this. These expansions were driven by demand; the renovations driven by age.  You will note the Barnett Arena was never upgraded.  It’s structure is the problem more than the aesthetics. It is an old building, it looks old, it feels old and the architecture is obsolete.  The former Rapid City Auditorium located at 7th and Quincy Streets from 1928-1973 was demolished in its 45th year.  The Barnett will be repurposed as a multi-purpose room to compliment the new arena and complex.

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The City spends $25-$30 million per year on the things mentioned in this comment. In other words, the amount spent on roads and infrastructure every five years is $130 million. The amount being requested to build a new arena that will last another 40 years is $130 million.  It’s not a matter of having either an arena or road and infrastructure repair, we can have both. It’s a balance.

The person writing this comment believes the Civic Center is a drain on resources.  FALSE: The Civic Center funds 75% of its operating and capital expenses with revenue generated within the complex. The other 25% comes from the Gross Municipal Receipts tax, or the BBB (bed, booze and board) tax – a 1% tourism tax created for the operation of event centers and for promotion of our City. No general fund money is used to subsidize this operation. These false claims made by people who don’t care to ask the questions are destined to be the downfall of Rapid City. Ask the questions!

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Not only is this person misinformed, but they believe “cooking the books” is going on. The entire Civic Center complex has been brought up to ADA standards. On-going maintenance and upgrading has and will continue to occur at the complex. “That magnificent building” will not be demolished. No one ever said the building would be demolished. The proposal is to add a new arena, next to the Barnett Arena, repurpose the Barnett Arena into a multi-purpose room to compliment the new arena and complex. The only thing being proposed is a new arena. Nothing will be demolished! Am I repeating myself?  Yes, I am, and I am hoping the person who wrote this comment, and others like it will be open to hearing the truth.

Let’s face it, rumors and gossip travel faster than the truth. It always has and always will. My only hope is, for us to be open to hearing the truth as much as we are open to hearing rumors.

For those who have not seen a presentation (all of these two cents authors) here it is: www.barnettarena.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Importance of Voting

Ok, let’s get right to the point: There is no justification for only 12.7% of registered voters turning out for our recent election. Two weeks of early/absentee voting and 12 hours of voting on election day provide plenty of opportunity to vote.  Since I’ve taken to public shaming, I have received several excuses from people about not voting. Here are a few:

Allender says no excuses

You’re right, it is an excuse.  But not a good reason. First of all, who are “the people”? Just you? You and a couple of friends? If you are not voting because you are not getting your way, then you don’t understand how democracy works. Think about it this way: the majority of voters DO get their way. Their candidate wins; their ballot issue wins; and winning for them has never been easier because people like you stay home. If you are discouraged at the way government works then I guarantee the wrong thing to do is give up: that is NOT the way our country was founded.

Didnt want anything

Again, who is “we”? And as far as doing what “they” want, “they” were elected by the majority of voters to make decisions on your behalf. If you disagree, isn’t it your duty to become involved?

bad time for people

Perhaps there is more to the story, but if your response is to withdraw rather than engage, then it doesn’t matter. Imagine if your teenage child told you what they wanted, but you, acting under your authority as a parent knew there was something the child was not considering… would you try to explain? Would you do what is right over what is popular? Would you be willing to make a decision that affects, at least temporarily, your relationship with your child? Or, would you take the path of least resistance and give-in? Leadership can be hard – that’s why most people don’t want to subject themselves to unjustified (and mostly anonymous) criticism.

Starting next week, there will be a great deal of media coverage on the Civic Center plan so I won’t go into that specifically, but I will tell you this: There is always more to the story.

Our government, whether national, state, county or city, is made up of people put in those positions by other people. If the government doesn’t operate to your liking then congratulations – you and I have something in common. If you choose only to complain, yet do nothing to improve things, then you will never be satisfied.

 

 

 

 

Why Consultants are Utilized

Good government requires the people being engaged and ready to hold public officials accountable. The following question was submitted to the Rapid City Journal’s “Two Cents” column.

two-cents-consultants

The City of Rapid City as well as most other municipalities in America utilize professional contracts for architecture and engineering services for a number of reasons.

1. Consultants have the resources to get the jobs done in a reasonable time.  Due to a general and varied workload, City staff members do not have the ability to dedicate a solid work day or work week to complete specialized projects.  In addition to managing multiple projects, City staff is continuously responding to questions and requests from customers such as citizens, business owners, other agencies, other City departments and elected officials.

2. Consultants have specialized expertise.  It is not cost effective for the City to employ staff that has the expertise in designing complicated projects such as a Government Building, a Street, a Swimming Pool or Dam spillway replacement that are rarely constructed.  In addition, the specialized computer systems and software necessary for such specialized projects would be very expensive to maintain.

3. Consultants have industry knowledge.  One example is the recent utility rate study contract awarded to a national engineering firm, HDR Inc. This contract was awarded based on their experience in performing this type of work to published standards. These standards are in place to make the rate structure legally defensible.  They also continuously work on rate studies across the country so they are very efficient in what they do and provide a best practice or industry standard perspective.  It would be nearly impossible to have City staff members gain the knowledge base and experience in conducting this type of study and have the support staff available to accomplish this study in an accurate and professional manner and in a reasonable time.

4. Consultants offer a non-biased professional opinion without being politically influenced. The City’s customer, the people, deserve objective evaluation of important issues that if left up to the local political environment may face short-cuts or alterations that could threaten public health and safety.

To answer your question Mr. anonymous question-asker: Yes, the Mayor and Council are paid to make decisions, and they do. Based on the enormity of some decisions and the potential risk to the community, some decisions cannot be left up to elected officials.

You may be interested to know that in 2016 the City of Rapid City spent nearly $500,000 less on consultants than in 2015.  Another $400,000 reduction is expected in 2017.

As for task-forces, virtually all of them could be avoided…if we didn’t care what the people felt about important topics facing our City. (see the first sentence above).

 

 

 

 

Civic Center Fix Won’t Defund Streets

two cents photo 4-1-17This recent submission to “Your Two Cents” is from a writer who believes the Civic Center Arena proposal (not yet presented for consideration) will take much needed funding away from street repairs. The writer is incorrect, but not without basis.

The proposed replacement of the Barnett Arena, rejected by voters in 2015 caused a whirlwind of rumors and false information. Once out, these rumors became the common theme of communication surrounding the proposal. One such rumor, was that street or other infrastructure repairs would be placed on hold for a number of years. Anyone hearing that rumor had reason to question the City’s ability to fund such a project as the $180 million arena. I won’t try to correct the last proposal’s issues but I will share a preview into the current, yet incomplete proposal: (1) No money designated for street improvements will be used to fund modifications to the Rushmore Plaza Civic Center, and: (2) Taxes will not be raised to fund the modifications. The funding will come from 50% of the current “Vision Fund” tax collections which is a half-cent sales tax approved by voters in the 1970s and again in the 1990s. The fund has contributed to many community projects ranging from swimming pools to parks to soccer fields. This fund has not traditionally been used for streets and was originally used to build the Civic Center. We have received a debt service projection for scenarios including repairing or replacing the Barnett Arena, each with annual payments of $6.5 million or less. There is much more to come on this subject.

Finally, the writer speaks of a “$25 million shortfall” to fix our streets. This phrase came from a City Council meeting during which Councilman Jerry Wright presented a report on the status of infrastructure funding and concluded that we were $25 million behind in achieving a realistic repair and replacement plan. No one can disagree with the report from an engineering or technical standpoint, but the overall goal of perfect streets is something needing more discussion. Without doing any real math on the subject, it seems pretty clear that in order to raise an additional $25 million for streets and infrastructure without raising taxes, we would have to eliminate parks and pools, all recreational operations including golf courses, maintenance of bike trails, eliminate the library, sell the Civic Center, de-fund code enforcement, risk management, community development and much of the Planning Department and strip our police and fire departments to the bare minimum, not to mention ending funding to all arts and other community assets that exist to enhance our community and its members. Then, voilà! enough money to pursue perfect streets!

Street and infrastructure funding is a concern in Rapid City, just like it is in every city in America. Rapid City will continue to fund street repairs and is actively looking for ways to divert funds from lower priority programs as one means of doing so. In the meantime, see the pothole or crack in the road as money spent on other important community needs.

Citizen input is needed, but uninformed criticism cannot help solve this issue.