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Sales Tax Up; Noem Making Millions in Interest on Coronavirus Relief Fund

It’s not every day that a five-million-dollar increase in sales tax revenues amidst a pandemic recession is only the second biggest budget story of the day. But it is today.

One has to wonder why South Dakota businesses need $400 million in CARES Act welfare checks when they appear to generating more tax dollars for the state than expected pre-pandemic. The latest Legislative Research Council revenue report shows that August general fund receipts beat last August’s take by 9.0% and the Legislature’s FY2021 target by 6.45%:

Legislative Research Council, State General Fund Receipts: FY21—August General Fund Revenues, 2020.09.09.
Legislative Research Council, State General Fund Receipts: FY21—August General Fund Revenues, 2020.09.09.

That healthy growth in sales tax suggests that if some businesses are losing, others are gaining. That’s the market at work, consumers voting with their dollars for different products that meet their changing needs, and producers responding by shifting production to meet those needs. Creative destruction only hurts the producers who don’t see which way the Invisible Hand is pointing. Why meddle in market forces with handouts to failing businesses who can’t get out of the way of capitalist progress?

The $5.13 million increase in sales tax over last year was only the second-biggest growth line. We got $6.94 million more than last year from investment income and interest, a difference LRC says comes from “interest earnings from the CRF.”

CRF—that’s the Coronavirus Relief Fund.

So that’s why Governor Kristi Noem has been dragging her feet on spending our coroanvirus money on actual coronavirus relief. She’s evidently whatever’s left of that $1.25 billion ($600 million to $700 million, her finance commissioner Liza Clark told the Legislature’s Approrpriations Committee yesterday, with surprising imprecision) in the bank to earn interest… and that interest won’t have any of the CARES Act restrictions. She’s using free money from the feds to create another South Dakota slush fund! Noem can spend that interest to plug holes in her budget. That $6.94 million neatly papers over the $5.67 million in August declines in insurance company tax, unclaimed property revenues, net transfers in, charges for goods and services, mineral severance tax, and alcohol wholesale tax and leaves a little extra for more national campaign ads and Rushmore replicas for Trump’s sweet dreams.

Every day Governor Noem can put off a Special Session, every month that she can convince her old Congress-critter compadres to extend the deadline past December 30 for spending CARES Act money, she can keep that money in the bank, generating interest for her budget priorities.

More sales tax money is nice. But for Noem, magic money she can generate from interest on coroanvirus relief money that she doesn’t spend on coronavirus relief is even better.

7 Comments

  1. John Dale 2020-09-11

    Nice. At least somebody is taking from the bank.

  2. Debbo 2020-09-11

    Meanwhile schools, children and teachers are in dire need of financial help to meet pandemic adjustments in education.

  3. leslie 2020-09-12

    Amen Debbo.

    Trump is inflaming and urging a large minority of the country to believe that the government constitutes a “deep state” conspiracy against him—and therefore them. He is feeding friendly media outlets like Rush Limbaugh, Alex Jones, and Rick Wiles racist and conspiracist fuel. He is convincing a large minority that the election is rigged against them. He is purging officials that might offer government oversight and replacing the justice department and judiciary with radical loyalists. He is encouraging armed vigilantes to consider themselves members of a special “Trump Army” to defeat the threat of the enemy at home. Most critically, he is suppressing our ability to vote through the mail at a time of national pandemic. As all this takes place, the assumption that a free election and transfer of power will happen peacefully grows dubious.

    A president pushing fascist rhetoric with autocratic tendencies is running America and our democratic safeguards are greatly weakened. Paramilitary violence by an enraged, white minority—organized and stoked by the president, to whom they are loyal, and local police who tolerate or empower them—is becoming a new norm. Slate, This Was the Week American Fascism Reached
    a Tipping Point
    By JOSHUA SHANES
    AUG 28, 2020 • 7:34 PM

  4. leslie 2020-09-12

    You all know this from the White House, commandeered by RNC last week. Here is the fact check on Puppet Kristi.

    Remember “You lie” Kristi’s House cohort screamed from the peanut gallery during Obama’s SOS address. Infectious, eh Kristi?

    ‘GOV. KRISTI NOEM of South Dakota: “In just four years, President Trump has lifted people of all races and backgrounds out of poverty. He shrunk government and put money back into the pockets of hardworking, ordinary Americans.”

    THE FACTS: Only this is true: Americans did get money back in the form of tax cuts and in direct government payments after the economy plunged into a recession this year from the coronavirus.

    Everything else is wrong. The government is still huge, not shrinking as she said. Federal spending was 20.6% of the gross domestic product in 2016, Obama’s last year, according to the White House Office of Management and Budget. That percentage has gone up and down but was 20.8% in 2019. It probably surged this year due to the fastest and sharpest downturn in modern U.S. history.

    The pandemic-induced recession has also flung millions of Americans back into poverty — as expanded government aid has expired. The unemployment rate is 10.2%, versus 4.7% when Trump took office. There are 14.8 million Americans collecting jobless aid, while just 2 million were doing so when Trump became president.’

    https://www.usnews.com/news/politics/articles/2020-08-26/ap-fact-check-gop-taps-distortions-to-heap-praise-on-trump

  5. Debbo 2020-09-12

    If Democrats make up the mythical Deep State, Doddering Dunderhead, Kruel Kristi and the gang are the all too real Kiddie Pool.

  6. Rough Rider 2020-09-12

    I wonder where the August Tax revenues came from. Maybe a Corona virus Supper Spreader Event.

    Check out the Health Care costs of the 2020 Sturgis Motorcycle Rally. A Study was done by the Center for Health Economics & Policy Studies at San Diego State University.

    “We conclude that the Sturgis Motorcycle Rally generated public health
    costs of approximately $12.2 billion.”

    https://cheps.sdsu.edu/

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