With another year quickly wrapping up, state lawmakers, budget writers, and economists are taking stock of the last twelve months. Now, they prepare to move forward into the legislative session
State leaders dove into the numbers at the most recent meeting of the interim appropriations committee.
Derek Johnson is the state economist at the Bureau of Finance and Management. He said the last year produced a mixed bag for the state.
“The farm economy is a challenge right now for us in South Dakota," Johnson said. "Corn production is favorable, but input prices are high, borrowing rates are high, commodity prices are down, and overall farm income is down. The overall economy is a little bit softer than it’s been. There was discussion from some of the members that maybe the consumer is a little bit fragile or fatigued.”
Johnson said incomes in the state are holding steady, but inflation and a tight labor market continues to weigh the economy down.
“We finished Fiscal Year 2024 down about $9 million in sales tax collections, so that adds to the amount we need to make up," Johnson said. "Of course, year to date our sales tax collections are down year-over-year, so we’re currently missing that estimate by about 4.2 percent.”
He said it’s becoming a trend as the state moves into the new fiscal year.
“July was down 5.9 percent below previous July," Johnson said. "Collections in August were 0.6 percent up, September, 0.8 percent below, and collections in October 0.6 percent below. So, year-to-date in the fiscal year we are down 1.7 percent in sales tax.”
Johnson said like construction, furniture, communications and farm purchases represent the most notable drops in sales tax income.