South Dakota Budget Outlook Brightens Amid Uncertainty

The South Dakota Governor's Office is preparing the state's next budget, and economic advisers say they have a rosier revenue picture than expected. Revenue reports show that the state finished last fiscal year with $29.7 million more than predicted, a 1.08% increase.

State sales tax revenue in July was up 12.8% compared to the same period last year. Marnie Herrmann of Rapid City and chief banking officer at Security First Bank noted that average debit card transactions exceeded $50 for the first time this summer, reflecting price pressures on gas and grocery purchases.

Farm income has rebounded from a difficult stretch based on first-quarter 2026 reports, said Derek Johnson, state economist with the Bureau of Finance and Management. Beef prices have risen, and grain prices have increased recently, creating optimism among farmers.

However, advisers warned that outside factors, especially shifts in federal policy and climate, are creating uncertainty. Drought is affecting roughly 75% of the state, and extreme heat during corn's pollination stage will impact yields, according to South Dakota economics professor Evert Van der Sluis.