Panel says housing demand up, labor pool tight and stimulus flowing in South Dakota economy

Capitol News Bureau
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PIERRE, S.D. (KELO) — State government has collected whopping amounts of tax revenue this spring, as another round of federal coronavirus checks flowed from consumers into South Dakota’s economy, according to data presented Wednesday to the state Council of Economic Advisors.

State sales and use tax receipts climbed more than 16% for March and more than 26% for April from one year ago, far above the revised 10.1% estimate the Legislature had just set in February, Mark Quasney from the governor’s budget office told the panel. He said sales tax collections are up 10.6% overall through the first 10 months of the fiscal year.

What the business people and university faculty in turn told Quasney and his successor as the official state economist, Derek Johnson, is the hundreds of millions of dollars of federal COVID-19 aid have reshaped some parts of South Dakota’s economy. For how long wasn’t clear.

They said people from outside South Dakota have been trying in recent months to buy upper-end houses in the Sioux Falls and Black Hills markets, new construction projects have cost more because materials have gone up in price and also are harder to get, tourists are booking stays again especially in campgrounds, and there’s suddenly intense competition for workers.

The i word is back in the conversation too. “Inflation is the big one we’re watching,” said John Hemmingstad of Elk Point. “We don’t know what’s going on there.”

Dan Noteboom, an agriculture equipment seller from Corsica, said higher prices for corn and soybeans are good for their growers but also mean higher costs for livestock feeders. Then there’s the lack of rain, with pastures stagnant and relying on subsoil moisture.

“The growing drought deal is really concerning,” Noteboom said. As for prices overall, he said, “It’s going to affect our whole food supply for the normal person at the grocery store, and they’re already seeing a lot of that happen already.” 

Another factor Noteboom identified was political: U.S. President Joe Biden’s ‘America the Beautiful’ initiative to conserve 30% of the nation’s land and water by 2030. Noteboom said that would drive up food prices by taking land from crop production.

State Revenue Secretary Jim Terwilliger, who was the state economist before Quasney, said it was tricky to pinpoint what stimulus money did in South Dakota. “It’s hard to look out and know what the future holds because it’s a situation we’ve never been through before,” he said.

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