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.