Informational Meeting

MINUTES Informational Meeting Tuesday, April 25, 2023, at 4:00 PM Carnegie Town Hall, 235 West 10th St., Sioux Falls, SD 57104 1. Call To Order Council Members Present: David Barranco, Sarah Cole, Alex Jensen, Rich Merkouris, Marshall Selberg, Curt Soehl, Pat Starr (arr. 4:03 p.m.) Council Members Absent: Greg Neitzert Council Chair Curt Soehl called the meeting to order at 4 p.m. and noted that there was a quorum present. 2. Councilor Remarks There was none. 3. Presentations A. March 2023 Monthly Financial Statements by Shawn Pritchett, Finance Director Presentation: Approximately 10 minutes followed by discussion Pritchett provided the following statistical updates on the monthly budget through March 2023. For labor and employment, we are continuing to see a general increase in employment and labor force numbers. Employment numbers are up 2.4% over this time last year, with labor force up 2.0% over February 2022. City MSA unemployment was at 2.3% in February 2023, which is up from 2.0% annual average we saw for 2022. Statewide, the unemployment rate is at 2.5%, while nationally, unemployment is at 3.9% for the month of February. Inflation is at 5.0% for March, down from 6.0% in February, and down 4.1% from the peak we saw last June. General inflation came in at 5.0% for the 12 months ending in March; Food cost inflation was at 8.5% which is about 6.6% higher than what we were seeing prior to the start of the pandemic (March 2020). The energy index dropped to -6.4% in March. It was the first drop in energy prices since January 2021. Through March, we had $270.3M in building permit valuations. Year to date permit valuations came in at $105.9M less than last year at this time, or -28% due to one of the top five projects of 2022 permitted in March of last year (Cherapa II). However, we are up $57.4M over March 2021. Year to date the biggest driver for New Commercial has been Manufacturing, which is up $18M over last year, and Other Commercial (Strip Malls/Hotels/Restaurants) which is up about $3.2M Apartments are down $16.9M year to date and Office/Institutional/Educational developments are down $109.7M year to date. Again, this is due to the Cherapa II building, a top 5 project in 2022, being permitted in March 2022. When compared to 2021, New Commercial is up in all 4 sectors by a total of about $103.1M. New Residential Values are experiencing a decrease of about $42.6M less than last year at this time or down about 73%. Permits for new housing units are down about 27% from March 2022. Through March, 33 single family units have been permitted, which is down by 150 units over this time last year and 678 multi-family units have been permitted compared to 934 units last year, a 27% decrease. Overall, 736 total residential units have been permitted year to date which is 449 units less than last year at this time. Sales tax collections month over month are up 5.0% over March 2022. We remain up 4.6% year to date. The 12-month rolling average fell to 9.3% through March 2023 (year end 2022 was 12.2%). Entertainment Tax collections showed a 9.8% increase over March 2022. We remain up 6.0% year to date. The 12-month rolling average was 11.1% through March. Top Entertainment Tax Collection Sectors: experienced a 14% increase over March 2022 and has been up each month this year over 2022. Lodging: was up 0.02% in March 2023. Drinking establishments were down -8% over March, 2022, but were up 11% in January and 13% in February over 2022. Some of the negative industries are inflation driven: Lumber, hardware and garden were down $2.5M in March, and $422K in February. The average was up $7M monthly last year. Electricity and Gas are down an average of $3.8M in 2023. They averaged up $4.3M in 2022. Management and Business consulting continues downward – was down $1.1M on average last year and continuing to be down $1.5M on average for this year. Some industries that are up by a little: Manufacturing is up $2.3M in March but averaged $7.6M in 2022; construction is averaging $1M in 2023, was at $6.8M in 2022; wholesale to durable and non durable goods are up $2.3M in 2023 but averaged $14.3M in 2022. This is the 2nd largest category for sales tax base behind department stores. Some industries that are performing upwards: Agriculture is up $3-4M the last couple of months and averaged $1.15M last year; telephone communications are up $7.4M in March and this average was down $1.1M last year. An update given on consumer goods includes: department stores and general merchandise are up $7M on average in 2023 and were at $8.7M in 2022. This is the #1 largest source of the tax base. Grocery stores averaged $1.4M in 2023 vs. $1M in 2022. This is the 5th largest tax source. Apparel and accessory stores remain down but was down on average last year also – driven by family apparel retailers. Furniture average is up $1.4M this year compared to $2.1M last year.  Lodging tax revenue month over month is up 4.4% over March 2022, but this comes off a 34.0% increase last March – up 4.3% year to date. Bid tax revenue, which follows the lodging tax to a great extent, month over month is up 14.6%, which is up 2.2% year to date. The comparisons of the budget and actuals are on page one in the monthly financial packet. Through March, we have received 17% of anticipated budget revenues compared to 18% in 2022 and 17% in 2021. We are on par and trending slightly ahead of prior years in this regard. This is driven in part by stronger sales tax receipts. Through March, we have expended 24% of the budget, compared to 21% last year and 20% the year before. Overall, expenses are running about $7.5M more in 2023 vs. the first three months of 2022 and $16M more vs. 2021. We have had three snow alerts total through March 2023 - $3.1M. The 2023 snow budget – original budget is $10.1M; year to date spent is $8.9M through March. The available balance is $1.2M, just factoring in the fixed costs. Discussion followed regarding: business service differences between January, February and current numbers; the number of fire stations that will be required in the next ten years; changing the budget vs. dipping into reserves for any upcoming unknown weather or other scenarios; the delay of the State’s housing fund and if it impacts the City of Sioux Falls. 4. Public Comment There was none. 5. Adjournment The meeting adjourned at 4:23 p.m Tamara Jorgensen, MMC, Assistant City Clerk