Sioux Falls, South Dakota (KELO) — What does it mean to be the largest city in a growing state?
This means that jobs, development, sales taxes, and wages within the city will be a major driver of the state’s economy.
The City of Sioux Falls’ 2023 fiscal year report shows some of that impact. The report was presented to city council this week.
Sioux Falls accounted for approximately 23.3% of the state’s population of 919,318 in 2023.
Including the McCook, Minnehaha, Lincoln, and Turner County metropolitan statistical areas (MSAs) increases the population to 297,247, or more than 32%.
Sioux Falls is located in Minnehaha and Lincoln counties, and has commuters from those counties as well as McCook and Turner counties, so much of the data considers the four-county metropolitan area. The growth of each county and community is tied to employment, the desire to live near Sioux Falls’ amenities, and the desire to live outside Sioux Falls’ boundaries.
Although a four-county area makes up the MSA, Sioux Falls’ regional appeal extends beyond those counties, said Sean Pritchett, the city’s finance director. Pritchett said visitors are drawn to opportunities such as retail and medical care.
The nonprofit Dakota Institute reported in January that retail sales and use taxes accounted for 51% of state sales tax revenues in 2023.
Retail taxable sales make up the majority of taxable sales in Sioux Falls. In just one category, taxable retail sales for department stores and mass retailers increased 6% to $6.2 million from December 2022 to December 2023.
Mr Pritchett said the city’s status as a regional attraction and economy were important to the state.
The city accounts for about 27.9% of every penny of taxable sales in the state, according to the most recent city financial report.
Sales taxes generate revenue for the city and state. The state’s fiscal year 2024 general fund budget includes approximately $1.4 billion in revenue from state and use taxes. This accounts for approximately 64% of the state’s total general fund. The state’s 2025 general fund budget includes approximately $1.4 billion in state revenue and use taxes, or 58% of all state revenues.
In a sense, “as Sioux Falls goes, so does the state,” city Treasurer Sean Pritchett said of the two economies.
Jobs and wages can increase population and spending.
The state’s workforce is listed at 481,500 as of March 2024.
“The average annual resident workforce in the Sioux Falls MSA increased by 2,768 people, or 1.7 percent, from 163,101 in 2022 to 165,869 in 2023,” the city report said.
This represents approximately 37% of the state’s workforce. From the 481,500, he subtracts 165,869, leaving 315,631 employees spread across other parts of the state.
South Dakota’s economy has been adding jobs in recent years, with Sioux Falls slightly ahead of South Dakota in terms of growth in 2023. The state added 9,700 nonfarm workers in 2023, an increase of 2.1% in additional jobs, according to the South Dakota Department of State. areas of labor and regulation;
Employment in the Sioux Falls MSA increased by 4,700 people in 2023, according to a city report. DLR announced that non-agricultural workers rose by 2.7% to 4,500 people.
DLR announced in July 2023 that increased wages for state employees are contributing to boosting growth in the state. Data shared in 2023 is from 2022, the most recent available.
DLR announced that the state’s average salary in 2022 is $54,053 per year. This is an increase of 5.5%. Wages are linked to reemployment support and workers’ compensation compensation.
Average salary in Sioux Falls MSA increased to $60,569 in 2022.
Although agriculture is still considered the state’s top industry, it is not a major factor in Sioux Falls’ economy.
Sioux Falls may not have as large of an agricultural economy as other parts of the state, Pritchett said. But that could be an advantage, he said.
“Sioux Falls has a diverse and robust economy,” Pritchett said. “So it’s more resilient to fluctuations[in the U.S. economy and recessions].”
Still, as the state considers future sales tax revenue, so does the city of Sioux Falls.
The federal appropriations office is the state government’s largest source of spending, set at more than $3.2 billion in the state’s fiscal year 2025 budget. The state budget for fiscal year 2025 includes approximately $1.4 billion in sales and use taxes in the general fund.
State officials said in February they were cautiously optimistic about the state’s sales tax revenue growth. Gov. Kristi Noem in December urged Congress to be cautious with spending in the current economic climate.
The state Legislative Research Council (LRC) and Bureau of Financial Management (BFM) shared sales tax revenue projections with the Legislature on February 13th. A Feb. 13 Keloland News article reported that BFM expects the state’s sales tax revenue to increase by 4.2%. In 2025 and LRC’s forecast, the growth rate in 2025 is 2.3%. Both amounts were approximately $1.5 billion.
Sioux Falls’ 2023 sales tax revenue forecast has been revised downward from 5% to 3%. So far in 2024, revenue is trending at a 4% pace.
This revenue directly impacts the city’s capital improvement programs.
“Looking briefly at the future, we had budgeted for 5% growth in our capital plan for 2023, so the result for 2023 was 3%, which means we are several percentage points behind achieving our 2024 budget. ” said Tom, the city’s assistant finance director. Hoover told the City Council on Tuesday (April 16).
“The end result is that we budget for the capital program in 2024, which requires a 7% growth in sales tax,” Huber said.