City sales tax continues steady upward climb

Consumers are spending, businesses are growing — and it’s showing in city sales tax revenue.

“We still are performing very well,” director of finance Shawn Pritchett told the Sioux Falls City Council on Tuesday.

Sales tax revenue was up 7.5 percent year over year in June, representing mostly actual sales from May. For the first half of the year, sales tax revenue is up 7.2 percent.

The first half of 2025 showed a 1.4 percent increase, “so a very significant change from where we were a year ago at this time,” Pritchett said. The entire year ended at 2.4 percent higher than the previous one.

“We’re really seeing some positive momentum in terms of our sales tax returns.”

Overall food cost inflation dropped to 3 percent in June, while energy dropped to 15.7 percent, compared with 23.5 percent in May. Core inflation came in at 2.6 percent for June.

“We see some slight improvement here from where we’ve been over time but still hovering at 3.5 percent when the target rate is 2 (percent),” Pritchett said.

By industry, “what I saw is pretty strong growth within most of the business sectors and up-and-down growth on the consumer side,” he added.

Sales tax revenue for wholesale trade was up 32 percent, which drove much of the increase, he said. Business services were up 13 percent, while utilities were up 15 percent.

Grocery stores were down 7 percent, and department/general merchandise stores were down 3 percent.

“Those are two fairly large and significant categories for us,” Pritchett said.

Restaurant sales tax revenue was up 12 percent, and remote retail sales tax revenue was up 28 percent.

The entertainment tax revenue is up 8.9 percent for the year, “so performing very well as well,” Pritchett said.

In June, it was up 12 percent month over month, largely driven by restaurants.

“The other major indicators there are lodging, alcohol sales and other entertainment,” he said.

The 10-year rolling average is at 4.2 percent after ending 2025 in the negative.

“It seems a fairly significant turnaround,” Pritchett said.

Lodging tax revenue is up 7.4 percent through June, primarily driven by prices for rooms coming up with steady occupancy, he said.

The post City sales tax continues steady upward climb appeared first on SiouxFalls.Business.