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State Revenues Shoot Up; Retail Charging Ahead on Stimulus

So that’s why Kyle got a raise….

In a victory for Governor Kristi Noem’s blind optimism, South Dakota’s tax revenues in July exceeded revenues from July 2019 and the wildest hopes of the Legislature. In the pleasant summer of 2019, July receipts totaled $171.9 million. Last winter, the Legislature budgeted on the assumption that this July we’d take in $182.3 million. The Legislative Research Council reports we raked in $201.4 million:

LRC General FUnd Receipts, July 2020, 2020.08.06.
LRC General Fund Receipts, July 2020, 2020.08.06.

Revenues in July were up 17.2% from last year’s haul and up 10.5% from the Legislature’s projection because South Dakotans are buying more stuff, building more stuff, smoking more tobacco, and even mining more gold. The only things it looks like we’re doing less of are drinking hooch and paying taxes on our stock portfolios.

But LRC isn’t breaking out party hats yet. They see strength in the retail sector but weakness in the services sector due to coronavirus. LRC worries that the expiration of enhanced unemployment benefits and lack of further government stimulus checks could produce “a depressed trend in taxable sales.”

LRC also notes an interesting disjoint in retail: the sales on which we impose sales tax were up 12.2% this June over last year, while gross sales were down 7.9%:

LRC, taxable sales and gross sales in South Dakota, Jan–Jun 2020, 2020.08.06.
LRC, taxable sales and gross sales in South Dakota, Jan–Jun 2020, 2020.08.06.

We’re still buying lots more groceries and eating out less, and we’re still going bonkers at Menards and Runnings on garden and home improvement supplies. But sectors like clothing and dining and drinking out which took a huge hit in April are recovering in South Dakota, reducing their year-over-year losses in June to single-digit percentages:

LRC, retail trade by sector, June 2020, 2020.08.06.
LRC, retail trade by sector, June 2020, 2020.08.06.

Hotels and motels still did 33% less taxable business in June 2020 than June 2019; movie houses are down 51%, and membership organizations are down 92%. Overall service sector taxable sales were down 7% in June.

LRC, service sector taxable sales, June 2020, 2020.08.06.
LRC, service sector taxable sales, June 2020, 2020.08.06.

The hotel/motel decline is also reflected in declining tourism tax. That extra penny tax brought in 34.6% less in June… but hey, that’s only a difference of around $600,000 compared to a net sales tax gain of over $19 million in July. And let’s be P-O-S-I-T-I-V-E—tourism tax is up, up, up from its April slump of 69.4%!

LRC, tourism tax, Jan–Jun 2020, 2020.08.06.
LRC, tourism tax, Jan–Jun 2020, 2020.08.06.

But that darn LRC must not have gotten the positivity memo: they predict tourism receipts will remain below 2019 levels through September. And it’s going to take more than Kristi Noem’s optimism or Donald Trump’s flaccid and unconstitutional usurpation of Congress’s authority to tax and spend. Let’s hope she gives everyone in Pierre, not just her son-in-law, a 5% raise to support more spending and more sales tax revenues.


  1. owen 2020-08-11 16:33

    It proves that the money the federal government gave out due to the pandemic. People had to survive and they spent that money. Why are Republicans against giving out more help?

  2. jerry 2020-08-11 16:41

    owen, republicans know that economic stimulus does not help their cause. The only thing that does is chaos. The better the economy, the less these bozo’s feel wanted. Why do you think they do tax cuts to the rich when the economy is doing well, to destroy it so they can steal more. Follow their pattern blueprint that they use over and over again with the same results.

  3. Jake 2020-08-11 18:44

    Watch the numbers for the next quarter! The GOP doesn’t want another stimulus especially one that goes into the wallets of the many who lost jobs under Covid Our current numbers reflect the $1200/person and the unemployment of $600 that was a bi-partisan effort; this money went to the people who needed it most-not the big-business who got mucho. The people who spend the dollars are the ones who have kept the economy going-not the ones who padded their bottom lines and over-seas accounts.
    Trump and the GOP want to blame the Democrats for the current stalemate on talks-but you notice, don’t you who ISN”T involved? Trump and McConnell themselves!

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