May 18, 2022

As expected, Sioux Falls sales tax revenue isn’t increasing at the same unprecedented rate as it has for the past year, but inflation also is showing a little improvement.

The city’s April report showed sales tax revenue grew 10.3 percent for the month, which represents largely March taxable sales. It’s up 20.6 percent for the 12-month average.

Inflation was 8.3 percent in April.

“It’s still very high relative to historical norms,” city finance director Shawn Pritchett told the Sioux Falls City Council on Tuesday.

“It did go down very slightly … if there’s a win in there, we at least have peaked at least for now. … Hopefully, we start seeing that level off and hopefully decrease over the course of the next year.”

Inflation still is being driven by the energy sector, where prices are up 30 percent.

“If you remove food and energy from the inflation rate, all other goods are inflated at about 6.2 percent,” Pritchett said.

Sales tax revenue grew 25 percent year-over-year last April, so the city was up against a considerably higher base.

While revenue grew 10 percent this year, backing out inflation the true growth is 1.8 percent, “which is not inconsistent with where we’ve been over the long term if you look over the last 10 years,” Pritchett said. “While that’s a good number, it’s not an out-of-the-ballpark number when you start backing out inflation.”

The entertainment tax was up 21.2 percent in April and is at 34.5 percent for the 12-month average.

“That is very positive to see,” Pritchett said. That number, of course, is driven primarily in part by restaurant sales because this has a limited tax base and secondarily by hotel sales.”

The lodging tax was up 39.5 percent in April and is up 82 percent on the 12-month average.