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More Surplus Padding: Coronavirus Farm Subsidy Boosted Sales Tax Revenue More Than $48M?

On Wednesday I worked up a conservative analysis that says federal coronavirus relief dollars from the 2020 CARES Act, 2021 American Rescue Plan, Paycheck Protection Program, and direct payments to taxpayers may have generated $162 million in sales tax revenue in South Dakota and created a budget surplus of $86 million where we otherwise would have suffered a pandemic recession deficit of $77 million.

An economist friend writes to say my analysis left out another important chunk of economy-saving and surplus-swelling federal relief: the Coronavirus Food Assistance Program. That program writes checks to farmers and ranchers to cover “market disruptions due to Covid-19.” By definition, the CFAP provided cash that farmers and ranchers otherwise wouldn’t have had available to spend on Main Street, which is exactly the thesis of my analysis.

According to the Bureau of Finance and Management, CFAP allocated $1.039 billion to South Dakota ag producers. Apply my methodology—economic multiplier of at least $1.30 for every dollar of federal stimulus, exceptional savings rate of 20%—and those coronavirus farm subsidies translated into $48.6 million in sales tax revenue that we’d otherwise have gone without.

With that additional pandemic prop, the federal government’s share of South Dakota’s seemingly rosy state revenue performance amidst the pandemic would rise to at least $210 million. Without those pandemic farm subsidies and the stimulus I counted Wednesday that injected vital cash into our pandemic-stricken economy, South Dakota would have seen a budget deficit of more than $125 million.


  1. Guy 2021-07-23

    Cory, thank you for pointing out those “pesky” FISCAL FACTS that we, in “Conservative” and “Independent” South Dakota would rather remain hushed about. It’s far past time to admit that WE ALL benefit from government subsistence in some shape or form. I admit that I have benefited and I don’t feel guilty about it because I also willingly pay my taxes.

  2. Guy 2021-07-23

    My hope is that in time, most of us in South Dakota wake up and admit we are not as fiscally independent as we think we are or Kristi Noem leads us to believe. In South Dakota we’ve been believing this fairy tale for far too long and we’re happy to install leaders like Noem to keep telling us this fairy tale while putting down “blue states” for the same government welfare we take to keep our economy and budget afloat. Why don’t we FINALLY ADMIT that we need and do take Federal Government assistance and STOP BLAMING people from other states who also need the help? If we finally admitted our fiscal and economic vulnerabilities in South Dakota, we could begin the process of reconciliation in this nation and stop electing narcissist demagogues who are out for themselves further dividing us with fairy tales.

  3. Cory Allen Heidelberger Post author | 2021-07-23

    Guy, it’s really important that we recognize the full cost of the pandemic and the fact that what saved us from a real economic recession and budget hardship was the swift and robust federal response. The “freedom” that saved us was the freedom we got from federal subsidies that preserved our ability to buy stuff on Main Street.

  4. Porter Lansing 2021-07-23

    I’ll suppose, much of that disruption money sent to farmers was sent out of state to “good” colleges for those farmer’s best and brightest children, to begin a future in a place with a future.

    It matters little that SD residents don’t “recognize” the money we blue state voters send you every year. We who reach into our paychecks to help you out “recognize” when there’s a hand in our pockets.

  5. grudznick 2021-07-23

    Fake money

  6. Arlo Blundt 2021-07-23 have to give President Biden credit for putting some structure and rules behind all this emergency Covid funding, for better or worse. President Trump may as well have hired a fleet of DC 3’s and kicked out bales of 50 dollar bills over rural America for all the thought behind his sponsored relief. Remember, he wanted Covid checks in the amount of $2,000 rather than 1400 per person. Very generous and inflationary if the money supply outpaces our output and productivity. Its a given that with the drought our farm output and productivity will be far down.

  7. Whitless 2021-07-23

    Thank you for this analysis. It shows without a doubt that the massive infusion of cash kept this state afloat. Once again, Kristi peddles an easily refutable fiction that her laissez faire COVID policies were the primary reason for the budget surplus. They most certainly were not.

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