SIOUX FALLS, S.D. (Joshua Haiar / South Dakota Searchlight) – South Dakota’s State Economist Derek Johnson told the state Banking Commission on Wednesday that a sluggish farm economy, driven by lower soybean, corn and wheat prices, has been a major factor holding down recent state sales tax collections.

Johnson, with the Bureau of Finance and Management, said sales tax collections tied to farm equipment fell more than 20% in fiscal year 2025 compared with the prior year. He said collections on farm equipment have continued to slide in the current 2026 fiscal year, down year-to-date by about 16%.

Johnson framed the impact of falling crop prices as outsized for an agriculture-dependent state.

“We know that in an ag-state like South Dakota, it bleeds into so many parts of the economy,” he said.

Johnson shared the news two weeks after Gov. Larry Rhoden said in his budget address that overall sales tax revenue declined in fiscal year 2025 for only the third time in 30 years, by 0.6%. Sales tax revenues for fiscal year 2026, which ends June 30, are up over 4% so far.

Johnson said the most recent month’s tax collections on farm equipment were higher than the same month a year earlier. That’s the first year-over-year improvement in roughly two years.

Beyond agriculture, Johnson told the commission South Dakota’s labor market remains tight, with the nation’s lowest unemployment rate of 2% and roughly three job openings for every unemployed person. He said the state is seeing a cooling housing market compared with the pandemic-era surge.