Sept. 17, 2025

City sales tax revenue in Sioux Falls showed some positive activity in August.

Revenue, which largely represents sales from July, was up 3.8 percent compared with a year ago. That leaves the city up 2.1 percent for the first eight months of the year.

“The fact that we grew that far (in August) off some decent growth last year, that is positive,” director of finance Shawn Pritchett told the City Council on Tuesday.

The city would need to achieve 4.8 percent growth going forward to reach 3 percent for the year, which is what the 2026 budget is based on, he said.

“I expect that hopefully we will continue to see some strong activity,” Pritchett said.

In the entertainment tax, “the news wasn’t quite as positive,” he continued.

Entertainment tax revenue is down 2.1 percent for the year, including a drop of 4.6 percent in August compared with a year ago.

Pritchett speculated the decline could be caused by flat restaurant sales and some decrease in lodging, though the city also is still dealing with an overpayment it received from the state last year in the entertainment tax.

The lodging tax was up 1.2 percent in August versus a year ago; however, “we still continue to see some softness in the tourism economy,” Pritchett said.

By sector, “the business sectors still remain in negative territory if you look at wholesale trade … lumber, hardware and manufacturing,” he said. “Business services remains the high point, but it is starting to reduce.”

Grocery sales have been flat, and department store revenue is trending down as “consumer sentiment remains soft,” he added, noting that overall consumer sentiment hasn’t been this low since the 2008 recession.