City Announces Service Impacts Reflected in Proposed 2026 Budget
Published on July 17, 2025
Ahead of Mayor Paul TenHaken’s proposed 2026 budget presentation next week, the City of Sioux Falls is announcing several budget and City service changes that will impact Sioux Falls residents. The changes are necessary due to Senate Bill 216, which was passed by the South Dakota State Legislature earlier this year. The bill caps property tax growth for municipalities, counties, and school districts, resulting in a permanent revenue reduction from property taxes for the City of Sioux Falls. As a result, the City needs to reduce its operating expenses by $8 to $10 million over the next three years.
“Permanently removing $8 to $10 million from the City’s operating expenses has been very challenging for our team that already runs lean, and it will impact the way we deliver some City services in the future,” said Mayor Paul TenHaken. “For Sioux Falls and our surrounding communities that comprise about one-third of the state’s population and drive our collective population and economic growth, it’s important to understand how state legislation has the potential to restrict our ability to provide important public services as we grow.”
The general fund is the City’s primary operating budget and the largest and only one that receives property tax revenue. The general fund was almost $250 million of the total $773 million budget in 2025. Within the general fund, about 64 percent of expenses go to employee wages and benefits, while the remaining 36 percent goes toward operational costs for City services.
The general fund pays for City services like:
- Public safety—police, fire, metro communications, and emergency management
- Street maintenance—snow removal, pothole patching, and asphalt and slurry seal programs
- Parks, pools, recreation, and libraries
- Public health—mosquito control, health inspections, and Falls Community Health
- Planning and development—commercial and residential building permits and inspections, property maintenance, historic preservation, housing, transit, and planning and zoning
Mayor TenHaken’s administration worked alongside departments to identify ways to “recalibrate,” or change and innovate the way City services are delivered, rather than across-the-board cuts. Through examining data and collaborating on service delivery, the City identified $6 million of permanent reductions for the 2026 proposed budget, including:
General Government and Operations
- Part-time and consulting alignment
- Full-time workforce (3 FTEs eliminated: Mayor’s Office (1), Attorney’s Office (1), and Communications (1))
- Reduction of funding for subsidy agreements
Culture and Recreation
- Library hours of service reduction for Sioux Falls and Brandon locations (up to two hours per day)
- Outdoor pool closures after the first weekend in August
- Reimagine Midco Aquatics concession offerings
- Evolve the playground recreation program to incorporate the mobile recreation unit
- Phased closure of non-refrigerated outdoor ice rinks
Streets, Planning and Development
- Alignment of de-icing materials
- Phasing in City-owned motor graders
- Extend equipment replacement cycles and reduce equipment rentals
- Credit card fees shifting to customers who choose to use this form of payment
Public Safety and Health
- Public Health Grants expired (3 public health full-time employees reduced)
- Health clinic collaboration with community partners and streamline citywide code enforcement
- Police and Fire overtime reduction strategies
- Police tracking team and grant-funded coordinator eliminated; training reduced
- Fire program supplies and training reduced
Despite this permanent revenue reduction, the City will continue to invest in community priorities and double down on foundational investments in public safety, infrastructure, and quality of life. Mayor TenHaken will present the full proposed 2026 budget next Thursday, July 24, at 3 p.m. at Carnegie Town Hall (235 West Tenth Street).
“In the end, it’s pretty simple,” TenHaken said. “An imposed property tax reduction or elimination without an alternate stable revenue source will lead to a reduction in the current level of city services Sioux Falls residents receive.”
The Sioux Falls City Council will consider the proposed 2026 budget in September. If these recalibrations and reductions are approved through the budget, they will take effect throughout 2026.
To learn more about the City’s budget, visit siouxfalls.gov/budget.