SIOUX FALLS, S.D. (KELO) — During the One Sioux Falls briefing on Wednesday the city discussed the reasons why they are delaying the vote on the aquatics bond.
Shawn Pritchett, Director of Finance and Innovation and Technology for Sioux Falls said the main reason for the delay is the upcoming election.
“As we have had more conversations we decided that it would not be prudent for us to bring this forward until after the general election in November,” said Pritchett. “We talked with the city council and with our administration and with the public, we have talked about the impact general elections can have on the bond market.”
Pritchett said that they are not planning to bring forward or fund the bond until probably very late this year or early next year and that the change will not jeopardize the timeframe or plans regarding the bond.
Pritchett said Imitated Measure 28 (IM-28) could cause some uncertainty regarding the project.
“It’s certainly a factor, said Pritchett. ” There is some uncertainty regarding that initiated measure and its impact not just on the state but whether it would impact the city as well,” said Pritchett. “The confusion around it is significant enough that it’s going to require judicial clarification or additional action by the legislature.”
Sales tax revenue is to make up $97.6 million or 43% of the city’s 2024 general fund revenue. The general fund pays for services such as the police and fire department. Mayor Paul TenHaken has publicly opposed the ballot measure to repeal the state’s items for human consumption tax, TenHaken and other opponents have cited unintended consequences of a repeal including a possible income tax.
Pritchett said while IM-28 raises questions for the city, it’s not an ultimatum between IM-28 and the aquatics bond.
“I wouldn’t say it an either-or, but it is a pause, because we would need additional clarification if it does impact us, because if it does impact us then we would have to go back and say based on what we expect the potential revenue loss would be, how are we gonna mitigate that and is this bond something we can continue to fund,” said Pritchett. “We are always reassessing and readapting and balancing, but if there is a significant revenue loss to the city there could be reprioritization, that said I don’t think it is either or I think it’s a major pause for us though.”
Pritchett said while the vote for the aquatics bond is delayed they don’t foresee a delay in their overall timeline on the project.
“I wouldn’t consider going to November to be a pause because it still aligns with our timeline relative to bringing on architects or things of that nature,” said Pritchett. “Where the pause would occur is if that initiated measure passes then it’s probably going to require a waiting period for judicial and legislative clarification, and that’s going to be a pause and that pause will take many months to clarify in my mind.”
Pritchett said sales tax was down last month
“On the July financial statements we did see our largest month-over-month decrease in sales tax revenues since 2020 with sales tax being down 3.7% in this July vs July of 2023 ,” said Pritchett.
The original plan was for the council to vote on a roughly $77 million bond in May. $9 million of this total was set to purchase the Sanford Tea-Ellis Wellness Center in west Sioux Falls.
Pritchett said that regardless of the results of the election the bond market could be unstable around the election.
“Irrelevant of who gets elected bonds get skittish, markets get skittish around election time, doesn’t matter who gets elected and then they settle in after a while,” said Pritchett. “We have always been advised that issuing previous to or right after an election can be more risky because you don’t exactly know what’s going to happen in the bond markets.”
Pritchett said the city usually tries to stay away from elections when issuing bonds.
“I don’t know that we have recollection that we have issued bonds around an election at least not in recent memory and we are only issuing bonds for sales tax revenue bonds only every 3 years so it’s not very often that we do a sales tax revenue bond,” said Pritchett.
