South Dakota’s financial forecast is showing early signs of strain as the 2026 budget year gets underway. State economists now project that general fund revenues will fall nearly 1% short of legislative expectations, largely due to declining sales tax collections—the state’s primary revenue source.
The updated figures were presented to lawmakers on Wednesday by the Bureau of Finance and Management and the Legislative Research Council. Both agencies cited weaker-than-expected consumer spending as a key factor. Notably, sales tax revenue also dropped last year, a rare occurrence that has only happened once before—during the 2010 recession.
Officials say the shortfall doesn’t yet trigger automatic budgetary action, but it does raise concerns about future spending plans and economic resilience.
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