September 17, 2020
Some Towns See Bright Spot with More Local Shopping
When the pandemic first hit, Dell Rapids City Administrator Justin Weiland worried sales tax collections would drop significantly and impede the city’s ability to provide services.
“I had nightmare visions of a boarded up Main Street,” he said. “Thankfully, our Main Street is still very healthy. We’ve had one or two new businesses open up even amidst this pandemic. Our community has shown a resiliency.”
In fact, sales tax collections in Dell Rapids have increased during the pandemic. Several other South Dakota communities have collected additional sales tax revenue, as well, including Hartford and Martin, both also served by Golden West. Shopping local not only provides much needed sales tax dollars, it also creates jobs and supports businesses that in turn contribute to various community causes and organizations.
Dell Rapids Collects $91,000 More in Sales Tax
Dell Rapids collected 11% more in sales tax revenue from January through August 2020, compared to the same time in 2019, Weiland said. That translates to an extra $91,000 so far this year that the city can invest in things like public safety, parks and street repairs.
The increase is more than double the 2 to 5% typical increase Dell Rapids has seen each year for the last decade or so, Weiland said. He credits the growth to more people shopping locally in order to stay safe. Much of the added revenue likely came from grocery and other retail sales, he said.
Steve Clark, owner and manager of the County Fair grocery store in Dell Rapids confirmed sales have been up. He said consumer habits shifted as restrictions were placed on bars and restaurants and more people worked from home instead of commuting to Sioux Falls.
“People are transitioning to making and consuming more food at home,” Clark said. “People are also consuming more alcohol and everything else at home, too.”
Home Improvement Projects Help Hartford
Hartford, another Minnehaha County community, has also experienced a significant increase in sales tax revenue this year. Gabe Steinmeyer, director of economic development with the Hartford Area Development Foundation, attributed the growth to local shopping, including groceries, as well as additional construction and home improvement projects, which have kept the building center busy.
“So many people have been stuck at home due to COVID,” he said. “They’ve noticed things they could do to improve their house, and they’ve been able to manage their workload to accomplish those things.”
The improvements to homes combined with added tax funds will help make Hartford an even better place to live and do business, Steinmeyer said.
“The more we shop locally and the more sales tax dollars we collect, the more the city is able to support the types of projects that spur more quality of life and enjoyment within our local community,” he said.
Sales Tax Offsets Tourism Tax in Martin
On the western side of the state, the town of Martin has seen an increase in sales tax revenue this year, as well. Receipts have been up about $10,000 or more a month for the last five months, according to Martin City Finance Officer Jean Kirk.
“It’s (the increase in sales tax revenue) been good for our city,” Kirk said. “It’s been good for some of the businesses around town, too, that people are staying and shopping here.”
At the same time, receipts for the extra penny BBB tax on bed, board and beverages in Martin have been down.
“People aren’t eating out, and people aren’t coming through and staying at the hotel,” she said. “But I think it will be going back up. We usually have a big hunting season.”
Encouraging People to Keep Shopping Local
The challenge now, according to Weiland of Dell Rapids is getting people to maintain the new habits of supporting businesses in their own communities. The additional revenue has been a bright spot in a generally dark time. Growth happened despite challenges faced by restaurants, bars, gyms, and entertainment businesses. Revenue has also trended downward in communities that rely on tourism.
“There’s been somewhat of a silver lining to the coronavirus with regard to sales tax,” Weiland said. “At the same time, the coronavirus has picked winners and losers.”
To see how your community has fared with sales tax collections, visit www.sdra.org/sales-tax-report-municipal.html and browse the monthly reports.