Tax revenue increases help city thrive
According to tax revenue reports, the City of Mobridge has been experiencing growth in sales since 2004, with the exception of 2010, but the drop was not as dramatic as one might expect in the national economic decline.
For the most part in the past 10 years, the tax revenue has climbed steadily. In 2004, revenue from the first and second penny taxes was $1,072,398. In 2012, the revenue from these taxes was $1,667,987.
The 3B tax, commonly known as the bed and breakfast tax, has climbed from $29,166 in 2004 to $106,540 in 2012. The tax funds are used to market, advertise and promote Mobridge with 30 percent going to North Central South Dakota Economic Development.
The 3B tax funds are used to promote Mobridge at regional sports and outdoor shows, promotional advertising and other tourism and business-related promotions.
“I am thrilled that the 3B tax revenue has steadily increased since its inception of 2004 and I believe that the increase is a direct result of the wonderful events that Mobridge hosts that bring in people from not only the surrounding areas but from surrounding states and beyond,” said Mobridge Area Chamber of Commerce Director Michele Harrison. “Some of the bigger events such as the Chamber Tourism Ice Fishing Tournament, the Sitting Bull Stampede and Beef n’ Fun are just a very few events that show the tax increase in their respective months.”
Harrison said other attractions or “permanent calling cards” such as Klein Museum and the Mobridge-Pollock School bring people to Mobridge in masses.
“When these people attend an event in Mobridge then our first and second penny sales taxes also increase as they purchase goods and services from our businesses,” she added.
The revenue generated by tax collection is what keeps the City of Mobridge running. Mobridge Chief Financial Officer Heather Beck said the yearly increases have helped keep the community financially sound.
But the increase in revenue does not mean the city necessarily has more money to spend.
“What we need to remember is that the cost of goods and services has increased during this time,” she said. “The costs of labor and health insurance have increased with insurance jumping 11 percent in each of the last two years.”
Beck said the city is doing well financially and more funding has been funneled into the undesignated fund, which she said is like a savings account.
“We have been able to build our undesignated fund balance in case there is an unexpected situation, for example like the ice storm in Sioux Falls,” she said. “We could pay for what we needed without cutting into our budget that provides for our services.”
She said the city has been trying to give the employees a fair cost of living increase annually, which also raises the cost of operation in the city. She said rising health care costs are a big concern this year, making the tax revenue increases more important.
According to Beck, in order to make the budget balance expenses vs. revenue, the city is expected to use $212,459 in unassigned funds. The revenue does not match what the city needs or would like to spend for the year 2013. This year $108,000 is to be set aside for the future as follows: new outdoor pool fund-$40,000; fire department equipment-$15,000; trails-$8,000; E911 Center-$5,000; street department equipment-$20,000; airport fuel tank-$10,000; and Scherr-Howe mural restoration project-$10,000.
This is done in December once the year has passed and there have been no unforeseen major expenses. The council approves these transfers, which are set aside in restricted funds to be used as designated.
The mural restoration project in Scherr-Howe is a new designation this year.
Typically the city does not spend what is budgeted every year for expenses and most departments put funds back into the general fund.
“Some departments do need to be supplemented at the end of the year due to unforeseen expenses,” said Beck. “Revenues should always come in over what was budgeted.”
Beck said the healthy area economy has allowed the city to continue to designate funding to these project accounts.
“We have been very fiscally responsible,” she said. “Hopefully if we continue to see enough increase for the undesignated funds, if a bond issue should pass in the future, we can release more of those funds for the new pool project,” she said. “That would ease more of the burden from the taxpayer than what we have already designated.”
The increase has continued in the first tow months of 2013 as the total sales tax revenue for January 2013 was $143,879 compared to $114,255 in January 2012. In February that increased from $121,420 in 2012 to $127,430 in 2013.
– Katie Zerr –