The month of May brought a distinct downward trend in consumer behavior in Sioux Falls as community members avoided going out and businesses across the city closed and cut staff.
The coronavirus pandemic and resulting state of emergency has led to back-to-back months of belt-tightening for shoppers, according to sales tax receipts reported each month by the South Dakota Department of Revenue.
Last month was particularly bad, with Sioux Falls suffering the second biggest drop-off in consumer spending compared to South Dakota’s other cities and sales tax receipts at a six-year low.
Given the conditions facing other cities and states, it could have been worse, said Jeff Griffin, President and CEO of the Sioux Falls Area Chamber of Commerce.
“I know the numbers are down, they aren’t down as far as I thought they might be to tell you the truth,” Griffin said.
The state tracks city sales tax revenue on a monthly basis, publishing data for communities across South Dakota and comparing year-to-year numbers.
The most recent report shows Sioux Falls suffered a nearly 15 percent drop in sales tax comparing May, 2020, to May, 2019.
Sales tax receipts last month totaled $9.84 million, a sharp drop from the $11.56 million in sales tax due for the same month in 2019.
The low numbers are Sioux Falls’ worst May since May, 2014, when Sioux Falls had roughly 25,000 fewer residents to shop at the local grocery stores, take their families to the mall or head downtown for a drink or a meal.
Sioux Falls, Rapid City and other larger communities in South Dakota might have seen their sales tax slip, but their loss was often someone else’s gain. Many smaller communities across the state celebrated significant jumps in sales tax revenue, including the Sioux Falls bedroom communities of Dell Rapids, Humboldt, Harrisburg and Tea. Even Brandon notched a 4 percent increase year-to-year.
“It was during this time when a lot of people weren’t traveling to jobs in larger communities,” said Nathan Sanderson, executive director of the South Dakota Retailers Association. “They were shopping locally.”
Another possible reason for the boon of taxable sales in small towns comes down to the fact that their officials never adopted the more restrictive policies used by South Dakota’s two biggest cities, Sanderson said.
“Some of those businesses, frankly, were open in smaller communities,” Sanderson said.
But even with the drop, the approach of city and state leaders to the pandemic spared local retailers from the worst of the economic collateral damage caused by COVID-19, Griffin said.
Most other states enacted forced closures for businesses and stay-at-home orders for families.
That’s spared Sioux Falls from some of the anxieties felt in other communities.
“I like better to see the way we’re approaching it” Griffin said. “It’s not a free-for-all. We’re expecting people to keep within the guidelines and recommendation but there’s some personal freedoms that I think give people some optimism.”
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Sioux Falls sales tax takes a hit in May as consumer spending slows - Argus Leader
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