CITY OF MILBANK, SOUTH DAKOTA ORDINANCE NO. 868 AN ORDINANCE AUTHORIZING THE SUBMISSION TO THE QUALIFIED ELECTORS OF THE CITY OF MILBANK OF A TEMPORARY ONE PERCENT (1%) MUNICIPAL GROSS RECEIPTS TAX FOR A COMMUNITY CHILDCARE CENTER CAPITAL PROJECT; ESTABLI
CITY OF MILBANK, SOUTH DAKOTA
ORDINANCE NO. 868
AN ORDINANCE AUTHORIZING THE SUBMISSION TO THE QUALIFIED ELECTORS OF THE CITY OF
MILBANK OF A TEMPORARY ONE PERCENT (1%) MUNICIPAL GROSS RECEIPTS TAX FOR A COMMUNITY CHILDCARE CENTER CAPITAL PROJECT; ESTABLISHING THE
PURPOSE OF THE TAX AND THE MINIMUM AMOUNT TO BE
GENERATED; PROVIDING FOR
REVIEW BY THE CAPITAL
IMPROVEMENT BOARD, DEPOSIT OF REVENUES INTO A SPECIAL CAPITAL OUTLAY FUND,
EXPENDITURE OF REVENUES FOR ELIGIBLE CAPITAL IMPROVEMENT PURPOSES, AND AN ELECTION; AND PROVIDING FOR RELATED MATTERS PURSUANT TO CHAPTER 10-52 OF THE SOUTH DAKOTA
CODIFIED LAWS.
WHEREAS, the South Dakota Legislature enacted House Bill 1245 during the 2026 Legislative Session, adding provisions to SDCL chapters 9-12 and 10-52 authorizing municipalities to impose a temporary municipal gross receipts tax for qualifying capital improvement projects upon review and approval by a Capital Improvement Board and approval by the voters of the municipality; and
WHEREAS, the City Council of the City of Milbank established a Capital Improvement Board in accordance with South Dakota law, and the Board, having evaluated the City’s long-term capital improvement needs, has identified construction of a publicly owned Community Childcare Center as its highest-priority recommendation; and
WHEREAS, the Capital Improvement Board consists of five members, one member of the City Council and four residents of the City who are not members of the governing body, appointed by the Mayor and approved by the City Council, and was established and constituted in conformity with the requirements of the Act; and
WHEREAS, the City has not imposed, and has not collected moneys from, a tax imposed pursuant to the Act within the twenty-four months preceding the adoption of this Ordinance; and
WHEREAS, the City Council finds, based upon childcare market analyses, employer surveys, workforce studies, demographic data, and community engagement, that the shortage of licensed childcare adversely affects employee recruitment and retention, workforce participation, residential growth, business expansion, and quality of life, and that construction of a publicly owned Community Childcare Center constitutes a valid municipal public purpose providing long-term benefits to the residents and businesses of the City;
NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF MILBANK, SOUTH DAKOTA:
SECTION 1. Authority and Purpose
This Ordinance is adopted pursuant to the authority granted to municipalities under SDCL chapter 10-52, including the provisions enacted by House Bill 1245 (2026), and all other applicable provisions of South Dakota law. Its purpose is to authorize submission to the qualified electors of the City of Milbank of a temporary one percent (1%) municipal gross receipts tax to finance eligible capital expenditures associated with a publicly owned Community Childcare Center Capital Project, which is intended to increase the availability of licensed childcare within the City while supporting workforce development, economic growth, housing development, and the long-term public welfare of the community. Nothing contained herein shall be construed to authorize any action inconsistent with applicable South Dakota law.
The tax authorized by this Ordinance is the additional municipal tax authorized by the Act and imposed under SDCL chapter 10-52. Any designation of the tax in this Ordinance, in the ballot question, or in public materials; including as a “gross receipts tax” or “CAPS tax”; is a designation of convenience consistent with the terminology of the Act, does not expand or alter the nature, base, or incidence of the tax, and does not impose or purport to impose any tax under SDCL chapter 10-52A.
SECTION 2. Legislative Findings
The City Council finds that: (a) independent childcare studies, employer surveys, workforce analyses, and demographic information demonstrate that current licensed childcare capacity is insufficient to meet existing and projected community demand, and that this shortage constitutes a critical public infrastructure need; (b) the proposed Community Childcare Center will provide a long-term publicly owned capital asset addressing these documented needs and constitutes a valid municipal public purpose; and (c) the City intends to pursue grants, donations, philanthropic contributions, fundraising, appropriations, and other lawful funding sources to supplement revenues generated under this Ordinance, and nothing herein obligates the City to finance the entire Project solely from such revenues.
SECTION 3. Definitions
For purposes of this Ordinance: “Capital Improvement Board” or “CIB” means the board established by the City pursuant to SDCL chapter 9-12 to review ordinances establishing a municipal gross receipts tax for capital improvement projects. “Project” means the Community Childcare Center Capital Project, consisting of the acquisition, planning, design, engineering, surveying, environmental review, geotechnical investigation, construction, furnishing, equipping, utility installation, site, parking, playground, landscaping, technology, and security improvements, and other eligible capital improvements necessary to establish a publicly owned Community Childcare Center. “Eligible Capital Expenditures” means expenditures authorized by SDCL chapter 10-52 and other applicable provisions of South Dakota law. “Special Capital Outlay Fund” means the segregated municipal fund required by South Dakota law into which all revenues generated pursuant to this Ordinance shall be deposited.
SECTION 4. Municipal Gross Receipts Tax; Minimum Amount
Subject to approval by the Capital Improvement Board, approval by not less than sixty percent (60%) of the qualified electors voting upon the question, and compliance with applicable election procedures and all other applicable provisions of South Dakota law, the City of Milbank shall impose a temporary municipal gross receipts tax at the rate of one percent (1%), as authorized by SDCL chapter 10-52. Revenues generated pursuant to this Ordinance shall be used solely for eligible capital purposes authorized by South Dakota law.
The minimum amount to be generated from the tax is Four Million Five Hundred Thousand Dollars ($4,500,000), reflecting the City’s current estimate of total Project cost based upon recent comparable construction costs. To the extent final Project costs exceed collections, remaining costs are anticipated to be funded through grants, donations, fundraising, appropriations, and other lawful sources. Nothing herein shall be construed as establishing a maximum amount of Project expenditures or limiting the City’s ability to accept additional lawful funding for the Project.
The tax shall apply to the same transactions, gross receipts, and uses, and shall be subject to the same exemptions, definitions, and sourcing provisions, as the taxes imposed under SDCL chapters 10-45 and 10-46, in conformity with SDCL chapter 10-52 and the Act. The tax shall be administered, collected, and enforced by the South Dakota Department of Revenue in accordance with SDCL chapters 10-52 and 10-59, and nothing in this Ordinance establishes, or shall be construed to establish, a tax base, exemption, or collection mechanism different from that provided by state law. The tax shall be imposed, and any change to the tax shall become effective, on January first or July first, following notice to the Department of Revenue at least ninety days prior to the effective date, as required by SDCL 10-52-9.
SECTION 5. Special Capital Outlay Fund
All revenues distributed to the City from the tax authorized by this Ordinance shall be deposited into a separate Special Capital Outlay Fund, maintained separately from all other municipal funds and accounted for in accordance with generally accepted governmental accounting principles and applicable South Dakota law. Revenues shall not be commingled with the General Fund or any other operating fund except as temporarily necessary for investment or accounting purposes consistent with state law. Interest earned shall remain within the Fund and may be expended for purposes authorized by this Ordinance. The Finance Officer shall maintain
complete accounting records of all revenues and expenditures, and all expenditures shall be subject to the City’s purchasing policies, annual independent audit, and all other applicable financial controls.
SECTION 6. Use of Revenues
Revenue collected from this tax shall be deposited into the City’s Special Capital Outlay Fund and used for the acquisition or lease of real property, a plant asset, or equipment, and for the construction, repair, or renovation of real property owned by the City, solely or jointly with another political subdivision, as authorized by SDCL chapter 10-52.
SECTION 7. Public Ownership
The completed facility shall remain owned by the City of Milbank, or jointly by the City and one or more South Dakota political subdivisions as authorized by law. The City may enter into operating, management, lease, license, or similar agreements for operation of the facility by a qualified nonprofit corporation, governmental entity, or private childcare provider, provided that ownership of the capital asset remains consistent with South Dakota law, the agreement serves the public purpose identified in this Ordinance, is approved by the City Council, and complies with all applicable federal, state, and local laws. Nothing herein authorizes transfer of ownership except as permitted by applicable South Dakota law.
SECTION 8. Project Administration
The City Administrator, Finance Officer, and other officials designated by the City Council are authorized to take all actions reasonably necessary to implement this Ordinance, including applying for and accepting grants, gifts, donations, contributions, and state or federal appropriations; procuring professional services and retaining architects and engineers; conducting environmental review, surveying, and geotechnical investigation; acquiring real property, easements, and utility rights; preparing plans and specifications; advertising for bids and awarding and administering contracts; and seeking additional funding sources. The City may phase the Project and combine tax revenues with other lawful funding sources. Nothing herein obligates the City to construct the Project solely from revenues generated by the tax established pursuant to this Ordinance.
SECTION 9. Capital Improvement Board Review; Election
Following first reading by the City Council, this Ordinance shall be submitted to the Capital Improvement Board, which shall review and approve or reject the proposal by majority vote in accordance with SDCL chapter 10-52. If the Board rejects the proposal, no election shall be called unless the Ordinance is subsequently amended and approved in accordance with applicable law.
Upon approval by the Capital Improvement Board, the City Council shall continue the statutory process for a second reading and, if approved, submit the question of imposing the tax to the qualified electors of the City at the next regular municipal election or at a special municipal election called for that purpose, conducted in accordance with applicable provisions of South Dakota law, including election procedures governing municipal bond elections to the extent required by law. The tax shall become effective upon approval by not less than sixty percent (60%) of the qualified electors voting upon the question.
The election shall be noticed, conducted, and canvassed in accordance with the election procedures made applicable by the Act, including SDCL 6-8B-4 and 6-8B-5, and the applicable provisions of SDCL chapters 9-13 and 12-1 to the extent they govern municipal elections. All acts and proceedings heretofore taken by the City Council, the Mayor, and the Capital Improvement Board in connection with the establishment of the Board and the initiation of this Ordinance are ratified and confirmed, and the officers of the City are authorized to take all further actions and to execute and deliver all notices, certifications, and documents necessary or appropriate to carry out this Ordinance in conformity with South Dakota law.
SECTION 10. Ballot Question
The ballot submitted to the qualified electors shall substantially read as follows:
OFFICIAL BALLOT QUESTION
Shall the City of Milbank, South Dakota, impose a temporary one percent (1%) municipal gross receipts tax, as authorized by Chapter 10-52 of the South Dakota Codified Laws, for the purpose of generating a minimum of Four Million Five Hundred Thousand Dollars ($4,500,000) to finance eligible capital expenditures associated with the acquisition, design, engineering, construction, furnishing, equipping, and related capital improvements for a publicly owned Community Childcare Center Capital Project?
The estimated total project cost is approximately Four Million Five Hundred Thousand Dollars ($4,500,000), with any remaining costs to be funded from grants, donations, fundraising, appropriations, and other lawful funding sources to the extent collections and final project costs require. The tax shall remain in effect as provided by South Dakota law.
☐ YES ☐ NO
The City Attorney is authorized to approve minor revisions to the ballot question that do not alter the substance of the measure but are necessary to comply with statutory election requirements or recommendations of the County Auditor.
SECTION 11. Administration of Tax
Upon voter approval, the Finance Officer shall take all actions required by South Dakota law to implement the tax, including certification of election results, notification to the South Dakota Secretary of Revenue, establishment of the Special Capital Outlay Fund, coordination with the Department of Revenue concerning collection, accounting for all revenues received, preparation of financial reports requested by the City Council, and administration of expenditures consistent with this Ordinance and applicable law. The Finance Officer may establish administrative procedures reasonably necessary to administer the Special Capital Outlay Fund.
SECTION 12. Duration and Termination of Tax
The tax authorized by this Ordinance shall remain effective in accordance with SDCL chapter 10-52. Consistent with state law, the Ordinance and tax rate shall remain effective until the last day of a calendar quarter occurring at least ninety (90) days after notification by the City to the South Dakota Secretary of Revenue and occurring on the earlier of:
Sixty (60) months after enactment of this Ordinance; or
June 30 or December 31 of the year in which the City collects the minimum amount specified in Section 4 of this Ordinance.
Nothing in this Ordinance shall be construed as guaranteeing a specific tax collection period, establishing a fixed expiration date, or limiting the City’s obligations under applicable South Dakota law. The City estimates, based upon current taxable sales activity, that the minimum amount specified in Section 4 may be collected before the maximum sixty-month collection period expires; however, the actual collection period will depend upon taxable sales activity and shall be governed by South Dakota law.
The Finance Officer shall monitor cumulative collections and shall provide the notification to the Secretary of Revenue required by this section promptly, and in no event more than thirty days, after the occurrence of the earlier of the events described in this section, so that the tax terminates at the earliest time permitted by state law. Any amount collected after the statutory termination date shall be handled as provided by state law and the Department of Revenue.
SECTION 13. Subsequent Capital Improvement Taxes
The City shall not impose another municipal gross receipts tax pursuant to SDCL chapter 10-52 if the City has collected revenues from such a tax during the most recent twenty-four (24) months, as required by South Dakota law, and nothing herein shall authorize successive or overlapping taxes in violation of state law.
SECTION 14. Compliance with State Law; Severability
This Ordinance shall be interpreted and administered consistent with SDCL chapters 9-12 and 10-52 and all other applicable provisions of South Dakota law. If any provision of this Ordinance is determined by a court of competent jurisdiction or the South Dakota Department of Revenue to conflict with state law, state law shall control, and the remaining provisions shall remain in full force and effect. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is held invalid or unconstitutional, such decision shall not affect the validity of the remaining portions, and the City Council declares that it would have adopted this Ordinance and each portion thereof irrespective of the invalidity of any other portion. Minor amendments necessary to conform this Ordinance to future statutory revisions may be adopted by the City Council as authorized by law.
SECTION 15. Effective Date
This Ordinance shall become effective upon adoption by the City Council, approval by the Capital Improvement Board, and approval by at least sixty percent (60%) of the qualified electors voting on the question at a regular or special municipal election. The tax authorized by this Ordinance shall become effective on the date established under South Dakota law following completion of all statutory notice and implementation requirements by the South Dakota Department of Revenue.
ADOPTED BY THE CITY COUNCIL OF THE CITY OF MILBANK, SOUTH DAKOTA
First Reading: 7/13/26
Second Reading: 7/27/26
Date Adopted: 7/27/26
Published: 7/29/26
Election Date: 11/3/26
Approved by the Capital Improvement Board: 7/16/26
CITY OF MILBANK Mindy Rogers,
Mayor Pro Tempore
ATTEST:
Cynthia Schumacher
Finance Officer
CERTIFICATE OF PUBLICATION
I, the undersigned Finance Officer of the City of Milbank, South Dakota, hereby certify that the foregoing Ordinance was published in the official newspaper of the City as required by law.
Cynthia Schumacher
Finance Officer
Date: July 29,2026
