On the first day of the 2021 Legislative Session, Joint Appropriations received a budget overview from the Bureau of Finance and Management. In that presentation, state economist Mark Quasney noted the strong sales tax growth that we saw in the first half of Fiscal Year 2021, following a generally underperforming FY2020:
Any economist or policymaker has to be keenly interested in how sales tax revenues would surge amidst a global pandemic and recession. What drove South Dakota’s sales tax revenues to blow past pre-pandemic Legislative projections in five of the last six months? Grocery stockpiling? Apocalyptic beer binges? The Sturgis Rally? Home construction and renovation?
Maybe some of those things were happening, but Quasney told Joint Appropriations that the two main drivers of our economic fortune came from two different sources:
And then we enter into those summer months, those summer collections, and… we had really strong reports coming, and I think Jeff and I had a lot conversations about what was going on and trying to figure this out. It didn’t seem to make sense with what we were seeing in the underlying economy. As we worked with the Department and contacts that we have out in the state, we started to narrow in on a couple of things in particular that were driving these increases.
Really what we narrowed in on was, first, wind farm activity that’s been occurring in the state and then, second, those stimulus dollars that we talked about. And so those are really the biggest drivers of what’s happening in South Dakota and driving up our sales tax right now [Mark Quasney, state economist, Bureau of Finance and Management, testimony to Joint Committee on Appropriations, 2021.01.12, SDPB audio timestamp ~0:17:30].
Wind farm sales and use tax revenues have more than tripled from calendar year 2016 to 2020; wind farm contractors excise tax have nearly quadrupled.
As for the impact of the coronavirus stimulus packages… well, you know what you did with your stimulus checks.
Amidst pandemic and economic turmoil, it wasn’t tourism, political refugees, or rodeo flag-waving that saved South Dakota’s economy and budget. It was green power and socialism. Campaign on that, 2022 candidates.