Oct. 18, 2022

Sioux Falls sales tax collections outpaced inflation in September, showing their biggest monthly increase since early this year.

Sales tax revenue for the month, which mostly reflects sales in August, increased 15.7 percent year over year, up from 8.9 percent the month before. The 12-month rolling average is 15.3 percent.

“That was very strong, even in lieu of the inflation rate we’re seeing,” director of finance Shawn Pritchett said in a report to the Sioux Falls City Council.

Core inflation was 6.6 percent, which reflects everything but food and energy. Those sectors continued to post double-digit increases, though there are signs they’re slowing, Pritchett said.

The growth in sales tax appears to be driven both by consumer and business sectors, Pritchett said, pointing to department stores, which are up 14 percent, and remote retail, which had its best gain in months, up 35 percent. Home furniture is up 17 percent after trailing year over year in recent months.

The entertainment tax grew 8.8 percent for the month, showing a 19.2 percent rolling 12-month average.

“Still steady but not as particularly strong as it’s been in the past,” Pritchett said. “We’re seeing some softness and not as much growth in the restaurants.”

The lodging tax showed solid gains at 16.2 percent for the month and up 33.2 percent over the 12-month rolling average.

“They’re much stronger than they were the previous month,” Pritchett said, adding there could be some carry-forward revenue reflected because overall occupancy and rates “have been fairly steady.”

The city’s labor force is up 3.7 percent year over year, and employment is up 4.5 percent, so “obviously with employment growing faster than labor force, you’re going to continue to get compression on the unemployment rate,” Pritchett said.

The city’s unemployment rate has averaged 2.1 percent this year — the lowest annual rate in 22 years, he said.

Here’s a look at how sales tax is adding up in communities throughout the Sioux Falls region: