Delivering his state budget, Gov. Rhoden makes boastful, but questionable, claim about S.D.'s economy
Gov. Larry Rhoden delivered his annual budget address last Tuesday, covering fiscal year 2027, which will begin July 1, 2026, and end June 30, 2027. It was a bare-bones budget, largely because “revenues have been pretty flat – only rising slightly.” He acknowledged that those revenues “depend so heavily on sales tax” and noted that the fiscal year which ended June 30, 2025, was “just the third time in the past 30 years our sales tax is down for the year.”
Trying to offset the discouraging news, Rhoden did express some optimism, saying that sales tax receipts have recently “bounced back somewhat.”
He also took a detour to present what I think is a rosier-than-real depiction of our state’s economy, specifically calling attention to personal incomes in South Dakota. Reflecting on the Noem-Rhoden economy of recent years, Rhoden said “we became a beacon to the nation … in fact, incomes soared so much that for the first time, our per-capita income became far higher than the nation as a whole … for years, people have claimed that South Dakota is a low-income state – not anymore.”
Calling us a “beacon,” suggesting that the entire country should look to South Dakota as the way forward is quite the claim, but given the poor performance of our state’s sales tax numbers, it demands an answer to a compelling question: If our incomes are so darn high, why did state sales tax revenues end up being down last year?
I think the answer is that Rhoden’s use of statistics creates a misleading sense of how well we South Dakotans are doing financially. Per capita income is an average. A state with a relatively small number of high income residents can tilt that average to the upside. I’m not saying that’s the case in South Dakota. I am saying that per capita income is a dubious metric from the get-go.
Misgivings aside, I checked out Rhoden’s claim by going directly to the Federal Reserve Bank’s tabulations for 2024 and found that personal per capita income in South Dakota was $73,959. That may be the highest on average, and I have no reason to doubt Rhoden’s claim, but it’s worth noting that 15 states exceeded that number, two of them being our next door neighbors Minnesota ($74,943) and Wyoming ($85,945).
My feeling is that if you’re going to do state-by-state comparisons, a much more useful and revealing metric is household, not personal, income. Why do I think it’s better? Well, here’s how my AI service puts it: Household income is often a better reflection of an individual's material well-being than per capita income because it accounts for shared resources and economies of scale within a home. Per capita income simply divides total income by the number of people, which doesn't account for how many people live in the household, while household income captures the total income available to all members.
On that score South Dakota doesn't come out so well. Again, using 2024 numbers from the Federal Reserve Bank’s listing of real median household income by state, I found that the median household income nationally was $83,730. The median household income in South Dakota? $79,850.
More tellingly, that household income number was exceeded by every one of our contiguous neighboring states. Here’s the line-up:
Minnesota $92,350
North Dakota $88,080
Nebraska $86,140
Wyoming $85,945
Iowa $85,480
Montana $81,920
South Dakota $79,850
Learning that South Dakota has the lowest household income in the region should serve as a wake-up call to Rhoden and the legislature as they search for productive ways of spending our money.
That “beacon” Gov. Rhoden boasted about may actually be something more like a “warning light.”
John Tsitrian is a businessman and writer from the Black Hills. He was a weekly columnist for the Rapid City Journal for 20 years. His articles and commentary have also appeared in The Los Angeles Times, The Denver Post and The Omaha World-Herald. Tsitrian served in the Marines for three years (1966-69), including a 13-month tour of duty as a radioman in Vietnam. Republish with permission.
Photo: public domain, wikimedia commons
The South Dakota Standard is offered freely and is supported by our readers. We have no political or commercial sponsorship. If you'd like to help us continue our mission to advance independent political and social commentary, you can do so by clicking on the "Donate" button that's on the sidebar to your right.
