Greater Sioux Falls Area towns see increase in 2020 sales tax

Published: Feb. 9, 2021 at 6:33 PM CST
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TEA, S.D. (Dakota News Now) - As the pandemic forced many to work from home in 2020, it lessened the need for people to commute from town to town.

By keeping residents in their hometown raised the sales tax for many smaller towns in South Dakota.

According to the South Dakota Department of Revenue, the City of Tea saw an increase in sales tax of 25% in 2020 compared to 2019.

“The 25% increase was $400,000 roughly, that allows us to do projects. We plan very well, our second penny of our sales tax goes all to infrastructure so that helps a lot,” Tea Finance Officer Dawn Murphy said.

City leaders say the increase in funds is much needed to continue to build the community.

Neighboring Harrisburg also saw a sales tax increase of nearly 19% throughout the year, which will be used for infrastructure, roads, and other needs as the city keeps growing.

“To give you an example, five years ago our sales tax revenue in the town of Harrisburg was only $77,000 and just this last January we’re at $204,000,” said Harrisburg Mayor Derick Wenck.

These increases in towns like Harrisburg and Tea are being attributed to the pandemic keeping people closer to home.

“Folks are no longer working in Sioux Falls they are staying home, they are working from home, they are doing all their shopping from their home communities so local businesses are seeing more business for the most part. In return, cities are seeing their sales tax increase due to that higher daytime population,” Executive Director of Lincoln and Minnehaha County Economic Development Associations Jesse Fonkert said.

One Tea business experienced that extra foot traffic in 2020, “We saw larger orders more or less, definitely saw more shoppers during the pandemic,” said Grocery Manager at Fareway in Tea Bryan Youngstrom.

“The pandemic shows power of shopping local; these businesses saw an influx of customers that are normally shopping in Sioux Falls during 2020,” said Fonkert.

Harrisburg and Tea weren’t the only towns to see a significant increase in sales tax throughout 2020, other towns like Baltic, Hartford, and Lennox saw an increase of over 10% as well.

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