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Primary Drivers of South Dakota Revenue Growth in 2020: Wind Power and Federal Stimulus

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:

SD Bureau of Finance and Management, Budget Overview, presented to Joint Appropriations, 2021.01.12, slide #10.
SD Bureau of Finance and Management, Budget Overview, presented to Joint Appropriations, 2021.01.12, slide #10.

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.

SD BFM, 2021.01.12, slide #11.
SD BFM, 2021.01.12, slide #11.

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.

6 Comments

  1. Donald Pay 2021-01-27 09:09

    Thanks to us socialists and environmental terrorists, South Dakota’s revenue grew. Who’da thunk that? Well,I and many others, and we thunk it many years ago. It’s pretty simple, or at least we thought so a couple decades ago. It might have been nice if the corrupt powers that run the state listened to the wind power advocates back in the middle to late 1990s, when we were saying South Dakota could be the Saudi Arabia of wind if we had the courage to face down the massive fossil fuel special interests that hijacked the Republican Party. But, alas, South Dakota Republicans wanted to stay in the 20th century to enrich Wyoming, rather than enrich South Dakota, because that campaign money the fossil fuel industry was dishing out took precedence over the well-being of South Dakota citizens.

    So, once again we see how South Dakota Republican leadership retarded South Dakota’s economic development. When are you going to kick these Republicans to the curb and elect 21st century leaders.

  2. Nick Nemec 2021-01-27 09:13

    2020 saw the construction of a major wind farm in Hyde County. Some construction actually began in the fall of 2019, paused over the winter of 2019-2020, resumed and was completed in 2020. I would be interested in seeing municiple sales tax collection comparisons for Highmore for this timeframe.

  3. Cory Allen Heidelberger Post author | 2021-01-27 18:07

    Donald, this information from BFM shows South Dakota the need to wake up from the fantasies of the Republican Party. Green power saved out sales tax revenues. So did big federal government intervention in a marketplace that could not function properly during the pandemic.

  4. grudznick 2021-01-27 20:51

    Is it possible these fellows making up these numbers are the Deep State?

  5. Jake Kammerer 2021-01-28 09:45

    seems that the ‘deep state of IGNORANCE’ is a prevalent state of mind, Grudz….

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