The Rapid City Mayor, Jason Salamun, presented the 2026 City budget proposal to the Rapid City Council in a special session on Monday night. The presentation was also livestreamed on the City’s Facebook page and YouTube channel.
The City Council has scheduled budget review and discussion sessions with City department directors for August 5-8, from 3:30-5:30 p.m. daily in the Council Chambers of City Hall. While a quorum of the City Council may be present, no votes will be taken during these public sessions. State law requires the City Council to approve two formal readings of the budget by September 30 of each year.
The 2026 proposed budget for Rapid City totals $337,323,676 in both revenue and expenditures.
Key Highlights from the Mayor’s Message and Budget Overview:
- Population Growth: Rapid City’s population has grown by over 10,000 residents since 2020 within the city limits.
- City Rankings: Rapid City was named the 27th best-run city in the United States by WalletHub and ranks among the Top 100 Best Places to Live according to Livability.com. CNN Travel also recognized it as one of America’s Best Towns to Visit in 2025.
- Budgeting Approach: The 2026 budget is guided by a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to inform decision-making and resource allocation.
Strengths identified include:
- Diversified Economy: Key contributors include healthcare, agriculture, tourism, military and defense, construction, technology and engineering, manufacturing, and retail and professional services.
- Quality of Life: Rapid City has approximately 1,700 acres of parks and green space, abundant outdoor recreation, cultural attractions, and a growing restaurant scene.
- Focus on Public Safety: The budget allocates a significant portion to fire and police services, with plans to add more police officers and finalize Fire Station 1, along with a new station east of town.
- Airport Expansion: Passenger numbers are up about 11.5% year-to-date, and substantial investments in airport expansion are prioritized for the next year.
- Post-Secondary Education: Institutions like South Dakota School of Mines & Technology and Western Dakota Technical College contribute to innovation and workforce development.
Weaknesses identified include:
- Lack of Single-Family Housing: Shortages are driving up home values, property taxes, and insurance rates.
- Infrastructure Needs: Rapid growth has strained roads, utilities, and public facilities.
- Website: The current city website is difficult to navigate, with a redesign project and a new domain (RapidCity.gov) launching in 2026.
- Silos in City Operations: Departments sometimes function in isolation, leading to redundancies.
- School Facilities: Many school facilities are in need of modernization and expansion to accommodate population growth.
Opportunities highlighted are:
- Business Interest: Strong national interest in bringing jobs and investment to Rapid City.
- Annexation to the East: Plans for a large voluntary annexation eastward toward the airport to direct future growth and enable more housing development.
- Retail Expansion: Prioritizing growth of the sales tax base by supporting local retailers and attracting high-volume options.
- Year-Round Visitor Industry: Evolving toward year-round appeal for tourism, bolstered by new sports and theme park complexes.
- America250: Rapid City will be a premier destination for America’s semiquincentennial celebrations in 2026, with an initial allocation of $250,000.
Threats include:
- Substance Abuse: Addiction fuels crime and social challenges, with significant annual spending on related services.
- Affordable Housing: A critical need for increased housing supply across all affordability levels to prevent disparities.
- Property Tax Cap: Senate Bill 216 limits annual increases in owner-occupied property assessments to 3% countywide starting in 2027, necessitating a focus on boosting sales tax revenue.
- Low Unemployment Rate: A tight labor market (approximately 1.8% as of mid-2025) poses challenges for employers filling specialized roles.
- 27th Pay Period: A one-time expense in 2026 equivalent to an extra payroll cycle due to a fiscal anomaly.
Revenue and Expenditures by Fund:
The total budget revenue for 2026 is $337,323,676. Major revenue sources include:
- Sales Tax: $93,024,156
- Utility Fees: $63,418,596
- Property Tax: $26,859,579
- Construction Loans: $71,263,883
Total expenditures for 2026 also amount to $337,323,676. Major expenditure categories include:
- Capital Improvements: $113,226,762
- Public Safety: $58,329,844
- Utilities: $48,826,934
- Vision Fund: $24,925,044
- Public Works: $24,977,711
Sales Tax Distribution: For every $100 spent by a resident, $4.20 goes to State Sales Tax, $1.00 to the General Fund, $0.58 to the Capital Improvement Fund, and $0.42 to the Vision Fund. For hotels, rental cars, alcohol, and dining (7.2% general sales tax rate), an additional $1.00 goes to the BBB Fund.
Utility Rates: Rapid City’s utility rates are the 9th lowest in South Dakota among municipalities servicing 5,000 customers or greater. These fees are deposited into Enterprise Funds and are the sole means of paying for operations and maintenance for these enterprises.
Property Tax Distribution: Property taxes are the second largest revenue source for Rapid City’s General Fund. In 2024, Rapid City property owners paid $2.811 for every $1,000 in assessed property valuation. The total property tax bill is divided among the County (24%), City (16%), School (59.9%), and Stormwater (0.1%).
City Funds:
- General Fund: Accounts for primary local governmental services like police, fire, finance, engineering, planning, recreation, and library services, largely financed by sales tax (40%) and property taxes (24%).
- Special Revenue Funds: Proceeds from specific revenue sources legally restricted for specific purposes, such as Tax Increment Financing Districts.
- Debt Service Funds: Account for the accumulation of resources for long-term debt principal and interest, including Vision Fund Sales Tax Bonds for projects like the Summit Arena.
- Capital Improvement Project (CIP) Funds: Used for major capital facilities, receiving 28% of Rapid City’s General Sales Tax for roads, parks, structure reconstructions, and vehicle replacements.
- Enterprise Funds: Financed primarily through user charges for services like Water, Wastewater, Stormwater, Solid Waste, Ambulance (EMS), Airport, The Monument, and golf courses.
- Vision Fund: A unique fund established for economic development and civic improvements, funded by 21% of the City’s General Sales Tax. The Vision Fund Round VIII (2025-2029) allocates over $90 million to Community Projects, Economic Development, and Civic Improvements.
City Departments’ 2026 Focus and Budgeted Expenses:
- Mayor’s Office: Focuses on public safety, streamlining government operations, championing city interests, driving economic growth, and nurturing strong families. Budgeted at $1.2 million.
- City Council: Aims to enrich quality of life, enhance communication, and increase return on taxpayer investment. Budgeted at $0.7 million.
- City Attorney: Focuses on monitoring legal issues, providing legal advice, and interpreting municipal code. Budgeted at $1.1 million.
- Community Development: Provides development services, including permit review, inspections, and transportation planning. Budgeted at $6.4 million.
- Finance Department: Responsible for financial and city clerk functions, including grants and economic development. Budgeted at $4.9 million.
- Fire Department: Focuses on public education, fire prevention, and emergency response. Budgeted at $21.3 million.
- Human Resources: Aims to improve candidate experience, restructure the department, and strengthen employee health and wellness. Budgeted at $1.7 million.
- Information Technology: Focuses on upgrading fiber infrastructure, bolstering cybersecurity, and maximizing economy of scale. Budgeted at $2 million.
- Parks & Recreation: Dedicated to customer service and enhancing residents’ health through programs and sustainable places. Budgeted at $15 million.
- Police Department: Provides law enforcement and investigative services, prioritizing public safety and operational efficiency. Budgeted at $29.9 million.
- Public Library: Connects the community to education, information, and innovation. Budgeted at $4.6 million.
- Public Works: Maintains street and pedestrian systems, provides engineering and traffic services, and public transportation. Budgeted at $25 million.
- Airport Enterprise Funds: Aims to provide safe, efficient, and economically self-sustaining air transportation facilities. Budgeted at $17.5 million.
- Ambulance Enterprise Funds: Responsible for emergency and non-emergency ambulance services and other medical services. Budgeted at $7.2 million.
- The Monument/Energy Plant Enterprise Funds: Serves the community by bringing people together through events, entertainment, and hospitality. Budgeted at $19.6 million.
- Solid Waste Enterprise Funds: Provides safe, efficient, and environmentally friendly waste services. Budgeted at $16 million.
- Wastewater Enterprise Funds: Protects public health by providing for efficient and economical collection and treatment of wastewater. Budgeted at $85.9 million.
- Water Enterprise Funds: Delivers clean, potable water to customers. Budgeted at $32.8 million.
