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South Dakota officials say another drought this year could start to have a big impact on the state's economy. That's the warning economists gave to state legislators this week during their annual revenue update.
"I think we got away with it last year just because we've had some good years prior to it but another dry year. If it's anything like last year, it will really slow those guys down quite a bit," RDO Equipment salesman Colby Slining said.
Slining is an RDO salesman in southeastern South Dakota and says when farmers do well they buy machinery, but if there is another drought business will dry up.
"These guys are savvy business owners. They know if they can update they tend to do it because they know the lean years come. They've all been through it," Slining said.
It's the same message South Dakota lawmakers heard from the Bureau of Finance and Management.
"Really our taxable sales for machinery sales have went like this,” state economist Jim Terwilliger with the South Dakota Bureau of Finance and Management said as he pointed upward. “If we get another drought it may not collapse but it certainly isn't going to contribute a lot of growth to our sales tax base.”
Last fiscal year the state brought in $36 million in sales tax revenue from ag equipment, which is five percent of total sales tax revenues.
State officials say the taxes collected on machinery sales are an easy way to see exactly how the ag economy is doing, but they say there are many other areas of South Dakota's economy that agriculture affects.
"All the indirect things are hard to gauge. For example, in a lot of our rural South Dakota towns if you go and purchase things from a hardware store it's hard to pick up all those indirect things from our agriculture economy being healthy," Terwilliger said.
And if the ag economy is healthy so is the state's economy that's why it's not just farmers praying for rain this spring.
"You get a little bit of rain here and there at the right times that's what we're pulling for," Slining said.
State economists say if South Dakota sees normal precipitation this year agriculture will be another bright spot for the state economy in 2013.
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