In hot pursuit of the 2024 GOP vice presidential nomination, South Dakota Governor Kristi Noem is aggressively marketing herself as the creator of a conservative Canaan.  With the help of overwhelming Republican majorities in the South Dakota State Legislature, Noem has been leading South Dakota into a race to the bottom on taxes, services, and tolerance. 

South Dakota is one of only nine states – Wyoming, Nevada, Alaska, Washington, New Hampshire, Tennessee, Texas, Wyoming and South Dakota — that doesn’t have a state income tax.  This is a major reason why under-funded South Dakota ranks, to cite just a few examples, worst in the nation in teacher pay, 39^th in internet access, and 49^th in child wellness visits.

Meanwhile, Minnesota — a purple state neighboring scarlet red South Dakota — is becoming more progressive than ever. In 2011, Governor Mark Dayton raised taxes on the wealthy to put an end to chronic budget shortfalls that Republican Governor Tim Pawlenty used to cut state government services. Dayton’s successor Governor Tim Walz has used huge subsequent state budget surpluses to strengthen a broad array of popular state services.  And after the Democrats surprisingly won razor-thin majorities in the Minnesota Legislature in 2022, Walz and Minnesota Democrats have been engaged in a bold, fast-paced drive to make Minnesota a much more progressive place.

In other words, Minnesota and South Dakota are increasingly heading in opposite directions.

Best Economic Approach?

This begs the question: Which state’s direction is better for delivering economic prosperity? 

Noem has been persistently declaring her race-to-the-bottom approach to be the best path to overall economic prosperity.

“The last four years, we have made South Dakota the strongest state in America. We lead the nation in almost every single economic metric,” Noem claims. 

Governor Noem says her policies are attracting “freedom-loving people from every corner of the country to move to South Dakota, join our record-breaking economy, and pursue their American Dream.”

At the same time, Minnesota and South Dakota Republicans have long insisted that DFL policies are scaring away people and killing Minnesota’s economy.  For this reason, Walz’s Republican challenger in 2022, Dr. Scott Jensen, promised a set of very South Dakota-like policies, such as an elimination of Minnesota’s state income tax, which would have dramatically eroded Minnesota’s infrastructure and services. 

“Record-breaking Economy?”

South Dakota Standard’s reporter John Tsitrian recently did something that no other South Dakota news source seems willing to do these days. He fact-checked Noem’s “record-breaking economy” claims:

As 2022 closed out, you can see from the above graphic that South Dakota was dead-last in the country in GDP growth, with our state’s economy contracting 4.3%. Yep, that would be minus 4.3%. By comparison, the rest of the country grew by 2.6%. The BEA graphic also starkly reveals South Dakota’s dead-last standing among our contiguous surrounding states.  

This follows a steady, quarter-by-quarter contraction of South Dakota’s economy during 2022.  During Q1, we were at -3.5%.  During Q2, we were -1.7%.  During Q3, we were -0.5% — all crowned, of course by the fourth quarter’s descent to -4.3%. 

Each quarter’s performance significantly lagged the country overall and generally compared unfavorably with our contiguous neighbors.

To underscore our status as an economic laggard, BEA notes that South Dakota is one of only eight states that saw a decrease in its GDP for the entire year of 2022.

While the country overall prospered, albeit at a modest pace, we South Dakotans had our very own little homegrown recession.

A South Dakota recession? Worst in the region and nation? Who knew?

The emergence of the South Dakota recession ought to do at least two things. First, it should put an abrupt end to the Noem veep talk. Who wants the Governor with the worst economy in the nation on their ticket? Second, the South Dakota recession should discredit Minnesota Republicans who keep insisting that the surefire way to make Minnesota more prosperous is to imitate South Dakota’s fiscal race to the bottom.