Tony Gehrig: The Dirty Little Secrets Behind Property Tax Exemptions

Many folks say that property tax exemptions help spur the economy in Fargo. I clearly disagree and have voted consistently as such.

I know that a low, sustainable, and predictable property tax rate across the board is a better incentive to grow with Fargo then picking winners and losers.

But for the sake of debate let’s assume for a moment that I am wrong, and special tax payer funded exemptions for a selected few are the way to go.

Even if that were true, these exemptions are littered with dirty little secrets that the average tax payer has no idea about:

No Way To Look Back

Currently, when we commissioners grant a 5-25 year exemption it stays on the books no matter what. Doesn’t matter if it is required or not. Consider this example. We give an exemption because a business claims they wouldn’t profit for 20 years without taxpayer dollars. Let’s assume that in year 3 they profit a million dollars more than projected. Does the exemption go away? Nope, not in our current system. That is wrong, and that must change.

[mks_pullquote align=”right” width=”300″ size=”24″ bg_color=”#ffffff” txt_color=”#000000″]When I invest in something, I expect a return. When taxpayers “invest”, only the city government sees a return and your taxes aren’t reduced.[/mks_pullquote]

Taking Money From Schools

Here is the secret no one wants you to know. These exemptions don’t just cost you money, they take money from the schools, parks, airports, vector control, county, and every other agency that takes in money from property tax. How? Because when Fargo city commissioners exempt anyone from property tax, we don’t just exempt them from Fargo’s share of property tax (17% of your bill), we exempt them from all property tax. Those who claim my reduction plan would hurt schools were not only wrong; they ignore our current system does actually harm schools, parks, and more.

The Exemptions Definitely Affect You

When a property gets an exemption, the city doesn’t lose money. How? We simply charge everyone else in the city more in order to cover the cost of the lost taxes not being paid by the exemptions we grant.

You heard me right. If I exempt a building downtown to the tune of say, $10 million, all we do is make every other building in the city pays just a little bit more in their taxes. Not just other businesses, this applies to your homes too. This of course means that if a competitor of yours gets an exemption, you are funding the competition! This also means that your taxes are artificially high because we grant exemptions. Yes, taxes could be much lower if we simply had a low, sustainable, predictable rate instead of picking winners and losers.

Exemptions Are Unnecessary

The vast majority of projects getting exemptions don’t need them. They are profitable from day one. But tax payers are told, “You are investing!”

Odd term in my mind. When I invest in something, I expect a return. When taxpayers “invest”, only the city government sees a return and your taxes aren’t reduced. They stay high. How is that a return on investment if the individual does not benefit? You pay more and more as values go up, and the city simply spends more. Often times on things we don’t need. Bad investment if you ask me.

We can have substantially lower and predictable taxes in Fargo, which is what really spurs growth, if we simply resist the urge to pick winners and losers. We can have lower taxes and increasing budgets as illustrated in my tax plan. And if we lower taxes for all and stop handing out exemptions to commissioner/government favorites, we will see a much faster growing economy in Fargo. That benefits us all, not just the well connected ones.