|Retail Sales In Rapid City|
As Big As All Other Sectors Combined
(graphic from blackhillsknowledgenetwork)
Maybe it's just me, but it is hard to single out the source of my infatuation with sales tax revenues and their indication of how things are going in the economy. I'm smitten, I guess. And that's why I took it rather hard when Rapid City mayoral candidate Steve Allender blithely dismissed sales tax receipts (along with the torrid pace of building permits, by the way) as a picture of how things are going in Rapid City's economy, which he's been dissing and using as an example of incumbent Mayor Sam Kooiker's poor handling of his job since 2011. Allender's negative view of the economy surfaced during his televised debate with Sam Kooiker on May 3, to which I responded the following day with data from the South Dakota Department of Revenue indicating that sales tax revenues have steadily increased, outpacing inflation (and population growth) by a healthy measure, namely 6.8% a year, on average, from 2011 through 2014. Inflation during that period averaged 1.7%. I concluded that contrary to Allender's view, the Rapid City economy is healthy, vibrant and growing.
At the Rotary Club debate the following Friday Allender responded by saying that sales taxes and building permits are not enough of an indicator to conclude that the Rapid City economy has been good. I challenged him there to make his case, which he did here the following day. I invite readers to review Allender's post and its supporting data, including graphic information from either the "Black Hills Region" or "metropolitan Rapid City," neither of which is actually Rapid City-specific, but of some interest nonetheless. You can draw your own conclusions. I've drawn mine.
And the conclusion is? I stand by my opinion that the upward growth curve of sales tax receipts in Rapid City is a good indicator of an overall healthy economy. It seems self-evident to
|And Don't Forget That Strong Pace Of Building Permits|
(photo from rapidcityjournal.com)
So what do some of the country's leading researchers conclude about sales taxes as an economic indicator? Just this: "Higher levels of sales tax revenue indicate higher levels of consumption--a result of a strong economy and consumer base." It also notes that: "Retail sales are a strong force within today's economy. A local economy with strong retail sales reflects a strong consumer base with a willingness to spend."
I would think this is especially true in an economy like Rapid City's. In our town, retail trade looks to be about the size of all other economic sectors combined. Growth in retail sales is the big gorilla of our city's economy, whether we like it or not, so serious, real growth in that sector has to be pleasant news for anybody following economic affairs in this town. The challenge to whomever gets elected mayor next month isn't to right an already upright economy. It's to find ways to spread its benefits and opportunities out to the population and into sectors beyond retail.
That's what Allender and Kooiker should be tussling about. This city's economy is just fine. Where we take it, not where it's been, is the critical issue.