Sioux Falls Development Foundation wants city to impose Tax, because the airport isn’t doing it fast enough?

Is anyone else catching the story on how the Sioux Falls Development Foundation wants the city to impose a massive rental vehicle tax of $3 per vehicle for their own preferred projects?

Pitched by the Sioux Falls Development Foundation (SFDF), the tax would generate an estimated $1 million each year to aid economic development and pay for infrastructure improvements ahead of new businesses moving to town. Backers of the new tax say rental car taxes are commonplace throughout the country, and an analysis of 23 regional cities indicate all but three have a similar tax.

and…

Dan Letellier, executive director at the Sioux Falls Regional Airport, said the airport has deliberately put off imposing its own rental car charges until future needs like improving existing airport facilities such as parking and the rental car kiosk area becomes more immediate. If and when that happens, It will be a tougher pill to swallow if a $3 daily charge to all car rentals is already in place, he said.

and…

The majority of local car rentals occur out of the rental car kiosks at the airport, which falls under the jurisdiction of the Sioux Falls Regional Airport Authority. Because the Sioux Falls Regional Airport Authority operates as an independent governing body, Letellier also questioned whether the city and its voters could legally force those businesses to collect the $3 daily charge.

“We’re concerned about the legality of one municipality – the city of Sioux Falls – being able to impose a tax on revenue generated from another government agency, which is the airport authority,” he said.

Read it here.

Why is this group trying to accelerate the imposition of a fee that the Airport authority has the authority to collect? Well, as noted, it’s because they want the money for their own purposes, as opposed to the airport authority spending it on their own improvements.

I suspect if on the off chance, this new tax is passed by the Sioux Falls City Council – which it shouldn’t be – it will be crushed by the voters, and with good reason.

Citizens are not demanding the improvements. The airport isn’t demanding these improvements. I don’t even hear that the city is demanding it. It’s a private group who is pitching this, and wanting to do it largely on the back of the Sioux Falls Regional Airport Authority.

So, why has it even made it this far?

Maybe I’m wrong, but I really doubt the Sioux Falls voters are clamoring for a “Sioux Falls Development slush fund,” especially when as much as half of the fund will be collected locally from individual Sioux Falls residents and businesses.

If there are projects that need to be funded, it’s best to look within first. And only after that, determine if a project is worthy of taking more from people’s wallets to pay for. The thing is, if you’re looking at projects on an individual basis, and judge them on their need, their expense, taxpayer reaction, and what will happen if they pass, I suspect there are many projects which would likely not pass that test.

If you have a slush fund with millions in it to be thrown around with a reduced voter oversight? Well, then people tend to be far less frugal with other people’s money.

Economic Development isn’t a bad thing. Not at all. In the late 1980’s the State of South Dakota temporarily taxed itself for a loan fund, which it has leveraged for thousands of jobs. Loans are given out, and loans are repaid. But this? Taxing someone else for vague “project fund?” It doesn’t pass the smell test. The premise of a tax slush fund for vague concepts doesn’t show that there’s any care or respect for the taxpayer.

And that’s who any backers of it might be forced to answer to at the ballot box.

5 thoughts on “Sioux Falls Development Foundation wants city to impose Tax, because the airport isn’t doing it fast enough?

  1. Michael Wyland

    Pat:

    A few comments:

    1) There is support for the tax because the perception is that others – not SF residents – will be paying the tax. Also, those who travel know that taxes on travelers are far higher in most other cities, so why shouldn’t we get our share?

    2) The tax is being pushed by the SD Development Foundation as a way to fund development of its latest development park. However, there are a couple of issues with that:

    a) the ordinance as written does not mention the SD Development Foundation or the park; and
    b: there is no sunset clause in the ordinance, so the tax will continue long after the development park is completed.

    3) If the ordinance/tax is approved by the SF City Council and also by SF voters, the City of Sioux Falls will need to negotiate contracts or agreements with the entity or entities that receive funds from the rental car tax. This will almost certainly be the SF Development Foundation. However, expect there to be performance benchmarks, accountabilites, and specific date terms included in that contract – which would require separate SF City Council approval.

    4) “We’re concerned about the legality of one municipality – the city of Sioux Falls – being able to impose a tax on revenue generated from another government agency, which is the airport authority.” Does this mean the SF Airport Authority will mount a legal challenge to the tax? Will they try to negotiate a deal with the City of Sioux Falls?

    5) As noted earlier, many in Sioux Falls assume that car rental is something that happens at the airport and is paid for by out-of-towners. In fact, much rental activity is tied to local businesses doing their work and to local individuals securing alternate transportation while their cars are being repaired (typically after accidents). Since many insurance companies set a fixed dollar limit on rental coverage, and since many drivers don’t even have rental car coverage, a case could be made that an additional tax on rental cars would be paid in significant part by local businesses and individuals. The woman who manages the Alamo, Enterprise, and National rental fleets in SF testified to this effect, noting that the City’s request for data had such a short turnaround time that she couldn’t respond in time for her data to be included in the City’s initial report. The reported 80% of car rental activity attributed to the airport reduces to about 60% when her three franchises’ numbers are included.

  2. The Guy from Guernsey

    The Argus Leader is reporting that the Sioux Falls Development Foundation is withdrawing the proposal for the $3 tax – but not out of any amount of respect for the tax-paying public, nor to avoid the appearance of cronyism and impropriety.

  3. The Guy from Guernsey

    From the Argus Leader article:
    – – – –
    Last week, the foundation gained a letter of intent from a third business looking to locate at the park.

    But they also will require significant infrastructure be built, from roads to utilities at an estimated $40 million cost.

    “Foundation Park is a runaway success,” Barr said. “But now it’s up to us to get this thing done.”
    – – – –

    Mr Barr, I am in agreement that notching as charter tenants Logistics Buddy and The Fruit Club, each the he-coon tycoons of their respective industries (snicker, snicker, snicker), makes this a run away success. I would expect that each has the financial ability to procure a site developed to their requirements … and priced accordingly.

  4. mhs

    First: disband the Airport Board and make it a City department. All the airport authority has done for the past 25 years is build up a huge cash reserve. The previous Director stated on his retirement that his proudest accomplishment was building up the enormous cash cushion.

    Since when is it the job of government to build a fat bank account? Establish reasonable reserves, then either spend the excess on needed improvements or cut fees, period. The airport has no business increasing charges for at least a decade, they’ve lost that right.

  5. Pondering

    “A government which robs Peter to pay Paul can always depend on the support of Paul.” George Bernard Shaw