In yesterday’s budget speech, Gov. Dennis Daugaard emphasized how the state’s sales tax revenue, while growing, isn’t growing fast enough to fuel big spending increases on its own.
That number, revealed before the budget, raised some eyebrows in the newsroom. After all, sales tax numbers in Sioux Falls — the state’s largest city and economic engine — are booming:
Bolstered by new business openings and a record level of construction work, Sioux Falls’ sales tax revenue is on pace to generate an extra $1.2 million this year.
Through October, Sioux Falls had collected $42.9 million in city sales taxes, almost 8 percent more than last year’s take in that time frame and up from the 5 percent increase city offiicials had budgeted this year.
Read that here.
Statewide, sales tax growth year-to-year was 3.6 percent in July, 7.6 percent in August, 6.4 percent in September and 7.2 percent in October.
The 8 percent Sioux Falls is up by obviously exceeds all those numbers. So other parts of the state must be doing worse, right?
Generally speaking, yes. Here’s a map showing the October 2013 sales tax growth by county, compared to October 2012:
There’s 20 counties with declining sales tax overall, for a net decline of -$14.9 million in taxable sales. The other 47 counties are up by a total of $136 million.
That masks more variation at the city level (which lumps each county’s activity outside of cities and towns into an “other” category). There’s 131 city-areas with declining sales tax revenue, for a total of -$27.9 million. (That includes the parts of Sioux Falls in Lincoln County, which is down $1.2 million, while the parts of Sioux Falls in Minnehaha County have seen sales tax growth of $29.5 million.) Another 218 cities saw increases in sales tax, for a total of $88.2 million.
Among more prominent cities to shrink were Aberdeen, North Sioux City and Britton. Key growing cities include Sioux Falls, Rapid City, Belle Fourche and Brandon.
You can look at the data yourself, here.
But it’s important not to miss how dominant just a few large urban areas are in South Dakota’s economy. Here’s a cartogram of the state, with each county weighted not by actual land area, but by gross sales:
(Colors are added for clarity and don’t signify anything.)
The bigger the county on this cartogram, the bigger its economy, and vice versa. (Compare that to the actual county map.)
Generally speaking, this is simply a matter of population. Last year, I made a similar cartogram, weighting South Dakota’s legislative districts by population.