As much of the state continues to reel from the drought and reports of revenue shortfalls in state government become more common, the economy will be a greater factor than expected in November's elections.
State officials transferred an additional $15.5 million from reserves this week in order to balance the state budget, which is required by law. The state's fiscal year ended June 30 and final bills and other accounting entries continue some time after that.
Adding in an earlier transfer of funds from the reserves, the state has now used $35.4 million to balance its budget. Coupled with a shortfall in revenues from the video lottery and other sources, state government has had to adjust - even though sales tax collections, which provide more than half of the general fund dollars, remain strong.
What does it mean? On a national level, a poor economy is always bad news for the party in power. That's one reason why Republicans are worried. People vote their pocketbooks. Even though the national economy has been strong overall, the debt is growing at an unacceptable rate and the housing market has shown signs of weakening. Admittedly, the national economy has far more positives than negatives but when combined with the war in Iraq and other trouble spots, the GOP is vulnerable.
On a state level, agriculture is still vital and most affected by dry weather and this isn't likely to work in favor of Jack Billion, the Democrat candidate for governor. Billion has advocated a more aggressive use of the state's reserve funds for education, for example, and the drought, psychologically as well as economically, could make that proposal less attractive than it would be in a different time.
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Economics don't play out the same way in South Dakota as they do on the national stage. Historically, voters nationally throw out the party in power when the economy goes south. In South Dakota, voters generally stick with Republicans in thick or thin times. We would be surprised if the drought and other economic issues work to the Democrats advantage as they try to make inroads in the statehouse and other races.
