South Dakota’s “Strongest Economy” Generating Weaker Surpluses Than North Dakota, Iowa, Minnesota

South Dakota’s $85.9-million budget surplus last fiscal year came from wind farm construction and federal coronavirus relief and farm subsidies, not from any brilliant visionary fiscal policy from the Governor or the Legislature.

And if the Governor wants to claim that the state’s fiscal success comes from having “the strongest economy in America,” then we must ask why surrounding states with supposedly weaker economies are seeing even bigger budget surpluses?

North Dakota Gov. Doug Borglum said in July his state should have a $1 billion surplus in the general fund for the end of the 2019-2021 biennium. The state has $400 million more in general fund revenue than it projected.

Iowa Gov. Kim Reynolds said the state closed FY2021 with a general fund surplus of $1.238 billion.

The amount is $751 million more than the prior estimate of $487 million, according to the Iowa Legislative Services Agency (LSA). The state ended the fiscal year with net general fund revenue of $8.8 billion which is a 9% increase over the estimated $737 million.

Minnesota is already projecting a $7.7 billion general fund budget surplus for the FY2022-2023 biennium. The amount includes a $5.5 billion gain for 2022-2023.

The Minnesota surplus estimate does not include an additional $1.1 billion in federal money from the American Rescue Plan.

The Minnesota Management and Budget office said in a Nov. 21 report strong growth in income, consumer spending and profits drove “extraordinary” revenue growth in FY2021 [Rae Yost, “Neighbor State Surpluses Larger than South Dakota’s,” KELO-TV, 2021.12.10].

Yeah, yeah, Minnesota is bigger than South Dakota. But halve that $7.7B biennium surplus and divide it among 5.7 million Minnesotans, and you get a surplus of $675 per resident. South Dakota’s per capita budget surplus was only $97. In other words, whatever economic activity our Minnesota neighbors are engaging in, they are each generating seven times more surplus revenue than each South Dakotan.

Conversely, Yost notes that South Dakotans have raked in far more federal coronavirus relief per person than Minnesotans and Iowans:

Per person, South Dakota and North Dakota received the largest share per person of federal aid compared to Minnesota and Iowa and many other states.

South Dakota, Iowa, North Dakota received $1.2 billion. Minnesota received $2.187 billion

The Rockefeller Institute of Government said in August 2020 that $1.2 billion in federal COVID relief money broke down to $1,413 per person in South Dakota, $396 per person in Iowa and $1,640 per person in North Dakota. Minnesota’s $2.1 billion broke down to $388 per person [Yost, 2021.12.10].

The only states that had taken more covid relief per person as of August 2020 were Alaska, Vermont, and Wyoming.

Those figures suggest South Dakota does not have the strongest economy in the nation or even the region. But we do have some of the strongest federal welfare-check-grabbing hands in the nation.