City Hall bracing for budget shorfall

Sluggish sales tax revenues have City Hall prepping for a $1.2 million budget shortfall this year.

Sales tax revenue growth in March came in at 2.5 percent. While that’s static from where it was in January and February, it’s less than the 4 percent growth that was projected when the 2017 budget was adopted.

Sioux Falls Finance Director Tracy Turbak said Tuesday if the trend holds throughout the year, the city will need to find about $1.2 million in budget reductions to avoid using reserves to cover the gap.

Previously: Sales tax slide continues to start 2017

“If that rate fell to zero, by the end of the year that would be a shortfall of about $2.7 million,” he said.

To counter the slow growth, Turbak said the city’s 12 department directors are scouring their budgets to find areas to shave expenses. Some of that could be achieved through simple efficiencies, he said.

Right now, departments are paring back payroll expenses by limiting overtime hours and use of part time employees, he said.

“They’re focusing hard on cutting back on the number of hours of overtime people have to work,” he said. “And they’re really reevaluating the use of part time staff. If they can get by with a few less hours out of their part-time people, they’re doing that.”

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Reducing the amount expended on out-of-state travel is also helping alleviate the effects of lower than expected sales tax revenues. Turbak said the only out-of-state travel being authorized for city staff right now are trips necessary to maintain certain professional certifications. And if those options are available remotely or in state, they go that route instead, Turbak said.

“We’re looking more for online or in-state opportunities for training,” he said.

But understanding that economic indicators could worsen as the year goes by, Turbak said directors have also formulated contingency plans to reduce their budgets by 5 percent, though he didn’t provide any details of what’s in them.

“2.5 percent growth is not bad,” he said. “It’s not great but, by gosh, things could get a lot tougher.”