Sales tax is the primary driver for state revenue, and it continues to exceed projections.
As federal COVID cash infusions move further to the past, Governor Kristi Noem projects the state will receive an additional $115 million in on-going revenue for the coming fiscal year. Reflecting on her recent budget address, Nathan Sanderson, executive director of the state Retailers Association, said business leaders are noticing a change in the wind.
“On the whole, I think businesses are cautiously optimistic for ’24, nobody is really expecting a major downturn, but then again nobody is really expecting 2024 to be a record-setting year," Sanderson said. "Most businesses would say their gross sales, as far as dollars, were about the same as last year. But given the increase in inflation, higher costs, their net was probably about the same or down.”
Sanderson said that’s reflected in the governor’s budget proposal, including what she wants for cost-of-living increases for education, state employees and community health providers.
“We’re about on pace for 4% increases for the ‘big three’, that’s about a return to normal a little bit," Sanderson said. "The budget is still 7.2 billion dollars, which is almost double what it was 10 years ago. There’s still a bunch of federal money included in the Governor’s budget, and that’s going to be going away here in the next couple of years.”
While the state has authorized billions in spending on one-time projects across the state, addressing some ongoing challenges could have a tough path forward in Pierre. For David Owen, president of the state Chamber of Commerce, that includes childcare.
“We’re going to be back to regular old times," Owen said. "The South Dakota Chamber has been looking at this childcare industry for more than two years. There are issues there that are part of the marketplace, but there are some technical issues we can address. It’s a hugely important issue to workforce and one we cannot ignore.”
The legislative session begins in the second week of January.