Watertown Economy Hits New Milestone: 2025 Sales Tax Revenue Surpasses $11 Million

Northeast Radio SD News - Watertown, SD - The City of Watertown’s economy showed steady growth in 2025, with annual sales tax collections reaching new heights. The recent year-end report shows that the city’s 1st Penny (General) and 2nd Penny (Capital) sales taxes each brought in over $11.19 million, reflecting a 6.13% increase over the previous year.

The combined revenue from these primary tax streams increased the city’s coffers by $646,747 compared to 2024. These funds are vital to local infrastructure. By state law, the “1st Penny” generally supports the city’s general operations, while the “2nd Penny” is restricted to capital improvement projects such as land acquisition, emergency vehicles, and public facilities.

Growth Across the Board

The data reveals a consistent upward trend throughout 2025, with every month except January showing a year-over-year increase in general sales tax revenue. Notable performance highlights include:

·        May 2025: The strongest growth month, seeing a nearly 15% surge in collections compared to May 2024.

·        Peak Collections: June and December were the highest-earning months, both breaking the $1 million mark in a single month for the 1st and 2nd Penny funds.

·        Short-Term Momentum: The most recent six-month period outperformed the same period from the prior year by over $281,000, a 5.12% jump.

BBB Sales Tax Performance

The BBB Sales Tax—a 1% gross receipts tax on lodging, eating establishments, alcohol, and admissions—also saw healthy gains. Total BBB collections for 2025 reached $1,343,169, a 4.19% increase over 2024.

While the hospitality sector saw overall growth, it experienced some volatility during the summer and fall. Specifically, BBB revenue dipped by 5% in June and 3.67% in September compared to the same months in 2024. However, a massive 16.69% spike in August helped keep the year-to-date figures well above prior records.

Looking Ahead

The consistent growth in these tax figures suggests a strong local economy and high consumer confidence in Watertown. These revenues ensure the city can continue to fund essential services and invest in the long-term capital projects that define the community’s growth.