Jason Flohrs and Dustin Gawrylow on property taxes and incentives in North Dakota

Jason Flohrs and Dustin Gawrylow joined us to talk about property taxes in North Dakota.


(Please note - this transcript was copied from an electronic captioning service. We apologize for any errors, spelling, grammatical, or otherwise.)

Chris Berg:
Fargo's incentive programs for businesses could be costing you and me, the average Joe and Jane taxpayer, money. They could also be costing our schools money as well. Tonight at the city commission meeting, they reviewed some of these incentive programs. Joining us tonight live from Bismarck, the executive director of the North Dakota watchdog network to talk about how not to give our commissioners centralized power. Great to see you. Jason, let's start with you. You just got out of the city commission meeting and reviewing some of these incentive plans. Jason has got a guest post up at our web site talking about how your property tax bill, 7% is paying for these incentives. What happened tonight? Was it basically a rubber stamp or what's the deal?

Jason Flohrs:
That's what it was. The Fargo city commission decided to take a review of these economic development policies to really see what works for Fargo. Unfortunately, they didn't do a dive into it. They didn't make key reforms. They basically rubber stamped key policies, indexed a couple of things. Bottom line is, we still have millions of dollars of taxpayer money every year going to businesses that 99% of businesses in Fargo aren't getting.

Let's start with you. I think I want to tie in these incentive programs. We just got done talking about the possibility of charter schools here in North Dakota and more school choice. A lot of the unions are going to be freaking out about that because it could take away some of their money. There is a house bill 1326 that you've been talking about now, maybe in a committee hearing. I believe this week. Tell people about what this bill does and how it impacts their child or son or daughter's education.

Dustin Gawrylow:
What it says is that when the city, any city wants to give away taxes as far as giving breaks to whether corporations, investors, developers or anybody, they can give their portion away without getting permission from anybody else, but if they want to give away the school's or the County's money, they have to get permission from the County commission or from the school board. What this will do is allow for more responsiveness to the public because right now the city has a dictatorship over tax revenue. It has the sole ability to give away tax exemptions and the schools and counties really have no say in it. This would give those entities a say and it would allow them to be able to be responsive to their taxpayers and to their voters in questioning why they are giving away revenue when, on the other hand, as both Fargo and Bismarck and many school districts around the state are saying they don't have enough revenue. But it's really because they don't have the mechanism to hold the city accountable to these tax exemptions and really represent their own voter base.

So give us a specific example. Everyone knows about block 9. They've got multi-decade TIF and/or pilot and that money that is not being paid is obviously robbing the school district of potential tax revenue. One is that accurate? And is that kind of what you're saying is in the fewer, rather than the city just going hey, block 9, here you go. Now the actual school board was going to have to vote on this and say yea or nay if they're willing to give up that revenue. Correct?

Correct. And this would apply towards the school district would not control the city's portion. It would control its own portion. Right now the way TIF works, it's one of the more complicated policies when it comes to tax. It allows the city to divert the growth of certain property or certain district depending on the city and it allows the city to basically rein those moneys in away from the schools, away from counties, away from the parks and put it towards a specific project. What we want to do is we want to give schools, counties, parks, everybody in the local government system its own control over its own revenue and its own financial future. That's the only way that we will be able to minimize these exemptions and their impact on everybody else because when some people and some businesses don't pay their fair share, everybody else pays more. As you said, in Fargo, it's 7%. The exemptions that are given away by your sitting commission in Fargo cause your property taxes to be 7% higher than they should be. Well, that almost eats up the entire 12% state tax credit. So the state is sending money to locals to reduce your property taxes while your local cities are giving that away to certain developers and certain businesses. It's just not fair for anybody.

Jason, let me get your thoughts on this. I know you touched on this, as you're just opening up North Dakota here. But as I think know, North Dakota is planning to have a levy bill coming up on March 7 to be able to keep their mills where they're at or they may get lower due to the state. Would something like this that Dustin is talking about help put those costs in check and maybe even give that revenue that the school districts need --

Number one, if you're going to take property taxes based on the school district would have and take it away, you have to at least give the voters a chance to weigh in on that. You can't have Fargo making decisions for the City Council and others. One of the bigger problems with these programs long-term is they take -- they don't account for the increase in the city services that more business or more students or more economic development, more needs on city and school infrastructure bring in and so it looks like you're not giving money away because it's on future development. But as they stack these programs over the course much ten, 20, 30 years, you have development that every other taxpayer, every other person in the school district has to pay for.

We just got this breaking news. They did vote 4-1 to keep these incentives in place. I'm assuming that commissioner Garrett was the lone nay vote. Dustin, last question for you. Have you spoken to at school board member that tells you that they want to have more control over this revenue, 'cause I spoke with someone today that said I talked to school board members all the time. They don't really want to deal with this stuff. They just want to go help kids.

Bismarck city commissioner Steve Marquardt, has stated publicly that this sort of a plan to give school districts and county commissions more control over their tax base is definitely desirable. Most of those entities and people on them don't want to rock the boat, so they don't want to be in the dog house when it comes to local government. So the way things are right now, they really have no recourse to fight the city on these things. And what this gives them is recourse. It says if you don't like this plan, you don't have to vote for it. You don't have to give up your tax base. You get to keep the revenue. And each entity should have control over its own revenue and the city should not dictate the other entities what should happen at the local level because each entity is elected by its own voter base and is responsible to those voters.

Executive director of the watchdog network, also Jason Flohrs, the director of the North Dakota American for prosperity. Here is the thing, if you think it is a good idea, contact your legislator because 1326 is going to be in a hearing this week. Let him know that I want to empower my school board, my county commissioners and not give so much centralized power to my city commissioners. That's the way you can make a difference with this bill. Gentlemen, thank you very much for your time.

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