PIERRE, S.D. (KELO) — None had hard numbers to back up their statements. But several people on the Governor’s Council of Economic Advisors said Tuesday they had been told the $600 federal weekly bonus kept unemployed people in South Dakota from accepting jobs.
The bonus, known as federal pandemic unemployment compensation, ended July 25. It was in addition to the unemployed person’s state benefit.
Congress hasn’t agreed on whether to replace the federal bonus as negotiations continue on another round of COVID-19 aid, and President Donald Trump recently announced a $400 weekly payment for a limited time.
Governor Kristi Noem said Friday that South Dakota wouldn’t participate in Trump’s program but didn’t explain how she reached the decision. Her office hasn’t responded to KELOLAND News questions that were sent throughout the past 10 days following the original Trump memo.
Those questions included whether she supported the $600, what South Dakota’s exposure would have been under the $400, what amount if any she supported, who she consulted with, a request for the federal guidance, and the reason for the unusual headline on her Friday rejection of the president’s offer: “Governor Noem Grateful for President Trump’s Continued Leadership on COVID-19 Recovery.”
South Dakota had 7.2% unemployment in June, more than double the June 2019 rate of 3.3%. May unemployment was 9.4%. July data hasn’t been released.
U.S. Senator Mike Rounds has said he’s heard from South Dakota business people that they felt it was unfair that they had to compete against the $600 bonus from the federal government with its borrowing power. During the economic council’s meeting Tuesday, several business people made reference to the $600 bonus.
Doug Sharp of Watertown, who owns several vehicle dealerships, said he had heard of other business people being affected by it.
Carla Gatzke of Brookings, an executive for Daktronics, said she had anecdotal information that some businesses felt effects of the $600.
Another comment came from Joe Santos, a South Dakota State University professor of economics who delivered a presentation to the council. “Of course that’s a disincentive,” he said.
State economist Mark Quasney also gave a presentation. He said employment is a big factor for state government estimating sales-tax revenues: “It makes it really hard for me to do my job.”
During the financial crisis a decade ago, initial unemployment claims “intermittently” exceeded 1,000, he said; last week, they were 911 and exceeded 7,000 several weeks in April. As for continued unemployment claims, Quasney said, “It’s a positive sign that we’re falling.” During the financial crisis, he said, the highest point was about 8,000 continued claims; last week they were at 15,464.
State Revenue Secretary Jim Terwilliger told the council that state revenue from sales tax and contractor excise tax have held up well, although people have been spending money differently during the pandemic.
Sales tax receipts rose 10.8% in July compared to the similar month last summer, when July saw an increase of less than 1%. For the 2020 fiscal year that ended June 30, sales taxes saw 4.6% growth, less than the 5.8% that the Legislature had estimated.
Terwilliger described the next six to 12 to 18 months as “very uncertain times.”
“I kind of feel like we’re in uncharted territory. Trying to model this stuff is really challenging,” he said, explaining it’s unknown how fast the economy will come back. But it’s been holding up better than most people expected, he added. “And that’s a good thing.”