Local Governments On A Spending Spree After State Bails Out Property Taxes

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If you’re wondering why the North Dakota Chamber of Commerce has taken to the media to plead with local leaders to cut property tax mills, allowing property tax bills to actually be lowered for once, this is why: After the State of North Dakota appropriated nearly $900 million to buying down property taxes, local governments seem intent on gobbling up that “tax relief” with new spending.

In Minot, the city seems to be charting a course for a aggressive spending on new school buildings (something school officials say will offset all of the state’s property tax buy-down), and in Fargo city officials want a new city hall:

FARGO – City officials agree: the decades-old City Hall here is cramped, outdated and failing.

That’s why City Administrator Pat Zavoral wants to build a new City Hall, hoping to start construction perhaps as early as 2014, he told the Forum Editorial Board on Tuesday.

Many of the city’s departments are crammed into the current City Hall, which is about 24,000 square feet, Zavoral said.

A 40,000- to 60,000-square-foot building is ideal for the city’s growth, he said, based on a study the city did 13 years ago.

Adding that much space could cost between $8 million and $12 million, Zavoral said.

These are just two examples, but these are two of the largest taxing entities in the state. And I suspect that as the summer wears on we’re going to hear about more spending projects from local government that will eat up that much-touted property tax relief we got from the legislature.

As if buying down local taxes with state taxes could be called “tax relief.”

I guess we need to keep repeating it: You can’t accomplish property tax relief by pouring money on the people who are causing the property tax problem in the first place.

Maybe these projects are good projects, but the legislature didn’t intend for local governments to go on a spending spree because the state bought down property taxes. And this illustrates how the state’s approach to property tax relief will obfuscate local government accountability. If these are good projects, let the locals make the case to local taxpayers for the tax increases to pay for them.

By bailing the local governments out, all the legislature has done is clear the decks for more problem spending.

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Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • Ratbite

    I’ll wager King Denny Wallacker & the liberal Fargo city commissin will put an proposal on on the ballot & have the citizens of Fargo vote on “remodeling” the city hall. You know like they did with the Library. Voters approved “remodeling” the library so they tore the library down & built a new one!!

  • sbark

    I’ll be surprised if the “locals” dont leverage the 900 million in tax “releif” into a 25% down on projects…….and then scream for annual relief from the State Govt for the yearly payments on the rest………look for a wave of bond issues to finance the remainder with expectations of the state comes thru every year…………and then weve created the “new norm”………..same pattern as Obama “porkulus” trillions.

    • http://Sayanythingblog.com The Whistler

      It wasn’t 900 million in tax relief. The weasels are counting on spending in the last two sessions as new spending.

      • sbark

        thus my quotations around the word “relief” and reference to Obama’s porkulus

  • http://Sayanythingblog.com The Whistler

    So if Fargo’s grown so much as to need a new city hall they shouldn’t need to raise property tax bills to build it. The growth in the tax base should take care of it and then some.

    The growth should benefit everyone rather than the special interests that live off of other peoples’ hard work.

    • Say It

      While Fargo’s tax base has grown, how much of it pays property taxes?
      Citties and counties are notorious for allowing whole or partial property tax exemptions. Want to locate a business in a major city? You can bet, there will be property tax exemptions offered to lure that business.
      You would be suprised how many tax exemptions are given out.

      • http://sayanythingblog.com Rob

        Good point.

      • http://Sayanythingblog.com The Whistler

        So what’s the point of stimulating growth if it’s going to cost the existing taxpayers more because of all the freebies given out?

        Don’t the city leaders justify their giveaways as it will expand the taxbase and lower peoples’ tax bills?

      • SusanBeehler

        At Mandan equalization meeting the assessor stated 30% of Mandan’s commercial property is exempt from paying property tax.

    • zipity

      Not only that, two-thirds of the Fargo property tax bill goes to the School District.

      • http://Sayanythingblog.com The Whistler

        Still, I knew they had the highest mill levy in the state prior to the state legislature’s misguided attempts to bring relief.

    • kevindf

      RD Offutt’s kid received an exemption for her mansion.

      • http://Sayanythingblog.com The Whistler

        No sh*t? Why in the world would they do that?

        • zipity

          They just wanted to give the poor kid a hand. It’s tough out there today for children of the insanely wealthy.

          Why wouldn’t they give a large tax break for a wealthy dilettante to remodel a huge former industrial laundry building into a $1.75 million dollar mansion?

          Besides, $130K (the tax break) isn’t real money to these folks.

          The hoi polloi in Fargo can suck it. Poor people are so tiresome.

          https://secure.forumcomm.com/?publisher_ID=1&article_id=354285

          • John_Wayne_American

            they did that because after the 5th year, the city can tax that building for 3-4 times what it was collecting on an abandoned dilapidated laundry building. its called short term expense in exchange for long term return. I actually supported that expense after the dollars were spelled out in the paper.

          • http://Sayanythingblog.com The Whistler

            so why do they keep jacking up everyone’s property tax bills for their little projects?

          • zipity

            So, you support giving millionaires hundreds of thousands of taxpayers dollars (that’s what it amounts to, that money has to be made up somewhere) to build their mansion?

            Do you really think they would have walked away from a $1.75 million dollar project over $130K?

            Your world must have a sky composed of a most interesting color. Do tell.

          • John_Wayne_American

            do you have any idea about investment and return? I don’t recall the numbers, but using your $130K, if that is what they “cost” the taxpayer. in 5 years that 130 over 5 years or $26k per year will cost the re-developer, 4 times that or $104K per year which is a pretty dam good return which will pay back annually over the next 20-30 or 50 years

          • LenYol

            So, you support giving this millionaire and his useless family a $100M vacation at the expense of the tax payers?

            http://www.foxnews.com/politics/2013/06/18/first-family-trip-to-africa-projected-to-cost-up-to-100m-sparking-criticism/#ixzz2Wf8KJU9Y

          • zipity

            Que? I question the tax breaks for heirs to millions, so you think that makes me an Obama supporter?

            Looks like a case of Ready. Fire. Aim!

          • LenYol

            I didn’t say you were a supporter of the Muslim Marxist, See that little curved thing at the end of my sentence? I just asked a question.
            It’s you that did the Ready. Fire. Aim thing!

          • http://Sayanythingblog.com The Whistler

            I’m sure the peasants in Fargo appreciate the opportunity to walk by and the fence and admire the property.

          • John_Wayne_American

            It beats walking by and looking at a dilapidated abandoned rat trap, and in 5 years those folks that live in that building will be paying more in property taxes on that building than 15 -20 home owners combined.

          • http://Sayanythingblog.com The Whistler

            why should they wait to pay taxes like the rest of us. Who’s supporting the schools and the police today?

            Are you supposed to call 911 and wait five years for a cop to be hired? Or instead some young family has to suck it up and pay extra taxes when money is tightest because in order to support rich peoples’ lifestyles?

          • borborygmi45

            I suppose the alternative is to let it go into disrepair, and eventually the city can bull doze it for about the cost of the tax break perhaps more if the have asbestos in the building.

  • John_Wayne_American

    Fargo wants a new city hall, the attached civic center is outdated and too small for medium sized events and looses biz to smaller ones to the cities hotels, and other venues. Therefore, convert centennial hall to office space, gut the arena and put in 3 floors of office. Should be enough space to grow city government 3 fold.. and cost less than 2 million.

    If folks are worried about class B basketball at the Civic, they can put a basketball court at the Scheels Arena that the Fargo taxpayer wound up paying for after voting against that too.

    The Fargodome is sitting on a mountain of cash, cash that was earned by a well run facility. Since the Fargodome folks do a good job, why not have that same group run the Scheels Arena also. its time the taxpayer sees some return on our investment in that facility.

    City of Fargo gets a pile of money from a 1/2 cent sales tax used for infrastructure improvements, I suppose that is the pot of money they intend to raid for tier new City Hall. They should use that money to fix their roads, the water supply and flood protection for which it was sold to the voters.

    It blows my mind how a small group of elected officials drive the costs of home ownership in direct conflict with their voters and still get elected by those voters over and over.

    • zipity

      Ah. Um. Great. *cough*

      I and other Fargo taxpayers eagerly await the bill for the threefold increase in the city bureaucracy.

      Yay.

      But I’m sure it’s all “For the Children©” so shut up prole, and hand over your wallet.

    • petrakeena

      I thought the 1/2 cent sales tax was to be used for infrastructure as in flood control projects? How can the city of Fargo raid this account and use it for anything but the intended purpose?

      • http://Sayanythingblog.com The Whistler

        You didn’t read the fine print?

        • petrakeena

          I need to get a pair of those fancy rose colored glasses.

  • http://Sayanythingblog.com The Whistler

    If you bid the projects out the low bidder doesn’t have the resources to share with all of his friends.

  • petrakeena

    This is happening in so many communities that I’m surprised people haven’t revolted.

  • Marcus

    Fargo always has it’s hand out for a handout.

    It is rather curious that the self proclaimed “economic engine” is not “self sufficient”.

    The first thing that needs a major overhaul/remodel is the city leadership. They are a cancer that has a penchant for graft and are too arrogant to show true gratitude for what they are given.

    Maybe Fargo’s new city hall should be located inside the proposed $65-$100 million dollar ring dike at Bakke, Hickson, Oxbow. Afterall, it would be the “safest” city hall in the Red River Valley, with 500 year flood protection and operational under the most adverse conditions…right…?

    • Prairiemom3

      Yeah, read the Forum article: “State aid would help pay for the new new City Hall, Zavoral said.”

      Because being Fargo means never having to pay your own bills.

      • zipity

        Where exactly do you think State tax dollars come from. Unicorns crap them out? Money-trees perhaps?

        Fargo produces the largest flow of tax dollars into the State coffers (via income tax, sales tax, state fees) than any other part of the state. The oil patch may be changing that, but by and large that is still true.

        I love the Fargo haters. They hate it so much, I’m sure you will join them in boycotting it. Don’t come here and shop, see a show, eat at a restaurant or go to a sporting event/concert, etc..

        I promise you, we won’t miss you.

        • http://Sayanythingblog.com The Whistler

          I love it when freeloaders get huffy over people questioning how the money they earned gets spent.

          • zipity

            Your lack of reading comprehension is showing. Where do you think State tax dollars come from? Thin air?

            It gets collected from the citizens (a very large chunk of which live in Fargo), and then is appropriated on spending bills by the State as they see fit.

            You have a problem with it? Take it up with your state legislator.

            Or STFU.

            Your choice.

          • http://Sayanythingblog.com The Whistler

            I was talking about you.

          • zipity

            I’m sorry, I thought you were calling me a freeloader.

            I am not. I charge a very hefty fee for loading.

        • Marcus

          zipity,

          Flow of tax dollars isn’t the question. In fact it’s the worst excuse for a position.

          According to census.gov Fargo had 16.1% (percent) of its
          persons below poverty level from 2007-2011. That’s a remarkably poor track record for the city creating the most flow of tax dollars. Especially, when the remainder of Cass county came in around 13.2% (percent) poverty level.

          Fargo isn’t entitled to anything more than it produces. No different than any other area. However, the boorish mantra that people need Fargo to shop, see shows, eat out…etc… is faulty logic.

          If those things didn’t exist in Fargo, they would exist somewhere else.

          The mere fact that Fargo “takes” without asking, or “builds” schools without public approval is tantamount to a city government out of control.

          Without Fargo…, ND would survive, and quite possibly be healthier for it.

          • zipity

            What? The most urban area in North Dakota has a statistically insignificant (less than 3%) higher rate of poverty than the rural areas of the state/county?

            I am shocked.

            “If those things didn’t exist in Fargo, they would exist somewhere else.”

            And I have no doubt you’d be bitching about that hypothetical other place as well.

            “Fargo isn’t entitled to anything more than it produces.”

            Great. Can we extrapolate that to the very small communities in rural ND? Shall we reduce the flow of state tax dollars to them, so that it equals exactly what they paid in? I thought not.

            Yawn.

            Let me know if you ever come up with an original idea.

          • Marcus

            zipity,

            You’ve missed the point entirely…, as I thought you might.

            The sales and exchanges that are a result of non-Fargo residents creates much of the tax flow you are feigning as Fargo’s entitlement.

            Without question, I would buy lumber from a small town if the small town had the lumberyard, however, Fargo effectively killed every lumber yard within 60 miles. So I and others reluctantly pay homage to the beast.

            Regarding things existing somewhere else. On the contrary, if their local economy supports the venture, I applaud the diversity.

            Fargo’s “diversity” has been directly and indirectly funded with state and federal dollars via every hand out that Fargo leaders can pander for.

            It’s easy for a city to flourish when it’s subsidized…, but at some point it needs to become self sufficient. Which Fargo is not and their fiscal immaturity reflects that.

            A new city hall won’t bring Fargo better government…, it will only perpetuate fiscal inefficiency.

            Fargo is not as healthy as the PR gangsters are peddling.

            16.1% is as “original” as it gets. It speaks volumes about the inequities that have been designed into Fargo economy. Fargo isn’t the worst…but it’s interesting how high most urban areas rank for persons at or below poverty level.

            19.6% Grand Forks
            16.1% Fargo
            15.5% Devils Lake
            13.5% Valley City
            13.3% Wahpeton
            12.8% Jamestown
            12.4% Minot
            10.6% Bismarck
            10.2% Williston
            8.7% Dickinson
            8.1% Mandan
            5.2% Minot AFB
            8.5% West Fargo

          • zipity

            I see. So basically your argument boils down to “larger cities are inherently bad”. And you seem to be unable to grasp that the larger the city, the more people it tends to draw that are living on the edge of if not in poverty.

            “The sales and exchanges that are a result of non-Fargo residents creates much of the tax flow you are feigning as Fargo’s entitlement.”

            Oh really? Care to put an accurate number to that? Is it half the total sales and exchanges in Fargo that non-Fargo residents create? A third? Or is it simply the gravy on the potatoes that are the sales and exchanges of the over 100,000 residents of Fargo made on a daily basis.

            And I suspect, nay, I’m sure, that “inequities that have been designed into Fargo economy” is a telling phrase.

            Welcome unapologetic Socialist apologist.

            Socialism has worked out so well everywhere it’s been tried.

            But I am sure if we just surrendered to you and your benevolent comrades enlightened central planning, you could make it work this time for SURE

          • Marcus

            zipity,

            Again, you’ve missed the point and rely on fallacious arguments and aspersions to support weak theories.

            Dysphemism is the sign of an immature propagandist.

          • zipity

            As is the over reliance on your Daddy’s thesaurus.

          • Marcus

            zipity,

            I am generally curious, what is so “unique” to Fargo, that cannot be done anywhere else?

            It is rather conceited for Fargo or any Fargo propagandist to argue that 85% of North Dakotan’s must rely on Fargo being the financial mecca…, when Fargo’s “production” of all goods and services correlates to wages that relegate 16.1% (percent) of it population to live at or below poverty level.

            I also find it interesting that West Fargo is just slightly over half of Fargo’s poverty level at 8.5% percent.

            If Fargo leaders aren’t careful, they’ll steer the city and it’s residents down the same path as Stockton, CA and it’s financial woes.

            At the very least Dave Piepkorn tried to hold the city accountable for their spending habits but that prompted Mayor Dennis Walaker to make his first city-level endorsement of Melissa Sobolik. Which Sobolik publicly said she owes the win to her “fresh perspective” and the endorsement of Fargo Mayor Dennis Walaker.

            Again, what is so “unique” to Fargo, that cannot be done anywhere else? How will a new city hall bring about a more fiscally responsible city leadership that is prone to providing tax breaks that just leads to more tax breaks?

  • Say It

    I have a relative who has a condo close to Downtown Fargo. Been trying to sell it for over a year. The only buyers, offer low ball offers. There is no market for condos in the Downtown Fargo area, from what I can tell.
    From what I can figure out, Sanford is building that new medical center in southwest Fargo. That major move from Downtown Fargo to southwest Fargo, may be changing the Downtown Fargo housing market?

    • zipity

      Sanford is expanding into southwest Fargo. They are not abandoning the downtown location.

      The market for folks who want a $300K to $700K condo downtown in a sea of bars/restaurants with little parking, and no grocery store has always been limited.

  • SusanBeehler

    “By bailing the local governments out, all the legislature has done is clear the decks for more problem spending.” I agree with Rob.

    • tony_o2

      So let’s have the State pay their entire expenses (fully and properly). That ought to bring fiscal restraint to the spendaholics….

      Except for the fact that voters have a hard time giving the boot to those who bring home the pork. For example, our three amigos who retained their office for a couple decades….

  • VocalYokel

    If Fargo or any other city/municipality has “departments…crammed into the current City Hall” perhaps they should examine the concept of downsizing government instead of erecting a larger building which will no doubt be too small (again) in the not too distant future.

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