PIERRE, S.D. (KELO) — The governor’s budget office is trying to understand why state sales tax revenues grew faster than personal income in South Dakota during and after the COVID-19 pandemic.

The state Bureau of Finance and Management provides the Legislature with revenue forecasts each February as part of lawmakers writing the next year’s state budget. The bureau’s revised estimates for growth of sales tax collections the past three years were 1.6% for fiscal 2021, a 0.9% decline for fiscal 2022, and a 1.5% decline for fiscal 2023.

None of those estimates came close to the final numbers for those years. Sales tax revenue instead grew an unexpected 12.7% for fiscal 2021, stayed high at 12.2% for fiscal 2022, and rose 9.1% for fiscal 2023.

Historically, sales tax collections rarely grew by as much as 8% in any 12-month period. The bureau in February had forecast a 4.1% decline for fiscal 2024. With one quarter now in the books, collections were down 3.1% from July through September.

State economist Derek Johnson on Wednesday asked a panel of citizens from across South Dakota, known as the Governor’s Council of Economic Advisors, for their perspectives. Those who spoke pointed to a variety of pandemic-related steps by Congress and the White House that financially stimulated the nation’s economy.

The bureau’s commissioner, Jim Terwilliger, said the data suggest there was more income in the short term than initially thought. “I don’t see any reason why over a long period of time we would see that discrepancy,” he said.

John Hemmingstad, an investment manager from Elk Point, said there were a lot of unusual economic disruptions that came during the pandemic. Curt Everson, a former bureau commissioner, agreed. “The level of stimulus that was provided during and post-pandemic took many different forms,” Everson said.

For example, payments that started as federal COVID-related loans to businesses were forgiven and those became a direct source of income for the business owners, Everson said. He added that there was “a lot of economic noise” during the pandemic that might explain some of the differences.

Johnson noted there also was indirect stimulus in forms such as student loan forbearance, school lunch supplements, and even consumers refinancing debt to create more disposable income that could be used to purchase goods and services subject to sales tax. “I think it’s a combination of a lot of things that might be included there,” Johnson said.