Fargo City Commission Chases Status Quo On Corporate Welfare Programs Local decisions reinforce the need for HB 1326 at the state-wide level Februar

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Fargo City Commission Chases Status Quo On Corporate Welfare Programs

Local decisions reinforce the need for HB 1326 at the state-wide level

February 14th, 2017

Yesterday, the Fargo city commission "reviewed" its economic development "aka Corporate Welfare" programs in its meeting as reported by the Fargo Forum:

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"We're in competition all day every day so if we weren't doing this, if we decide to stop doing this, it would have catastrophic economic impact on our city," said Commissioner Dave PIepkorn, who chairs the Tax Exempt Review Committee. "If you think a lot of businesses come here just because we're nice, that's not how it is. That's naive."

According to Commissioner Peipkorn, businesses do not open or move to Fargo because there are customers or demand, they do it because the city offers freebies.

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Also from the Forum:

Commissioner Tony Gehrig, long an opponent of tax incentives, said as he has before that the city should just lower taxes for all instead of giving breaks to a few.

Commissioner John Strand expressed misgivings about "corporate handouts" in general but said he was reluctant to make too many changes to a program that appears to be working.

Fargo Commission Tony Gehrig has been a champion of property tax reform at the local level, however Commissioner John Strand's approach of knowing these "corporate handouts" are wrong, but supporting them anyways is the real problem.

If the handouts are wrong, don't do it!

Commissioner Tony Grindberg, who has warned that state lawmakers are scrutinizing tax breaks they allow based on how local governments use them, said he expects more discussion down the road. "I'm quite confident this debate is not over," he said, and the city might have to change its policy again to respond to new state laws.

This is absolutely true, and the most important way that the state legislature can pass this is to support HB 1326.

Contact your legislators today by clicking here.


HB 1326 Factsheet for Legislators

House Bill 1326 is a critical piece of pro-taxpayer reform, that can and should be the beginning of REAL PROPERTY TAX REFORM.

Basic Premise:

Every political subdivision shall have an affirmative control over its own tax-base and its own tax revenue. No political subdivisions shall dictate to other political subdivision(s) without the expressed consent of each governing body.

Bill’s Function:

1. Removes the unilateral power cities hold to exempt property from taxation without the approval of other political subdivisions.
2. Requires school districts and counties to vote in favor of exempting property for tax purposes whenever incentives or exemptions lead to a loss of tax revenue.
3. Applies to ad hoc exemptions, Tax Increment Financing, Renaissance Zone, or any other non-mandated power granted by the state to exempt property. Current or future.


If a tax exemption is good for all taxpayers and for all levels of government, the advocates of such exemptions should have no problem convincing individual governing bodies to approve it.


HB 1326 will veto city economic development efforts.


Cities will still have the ability to give away exemptions of their own tax levy, but will not be able to speak for schools and counties.

Before you vote against, answer one question:

Why should cities dictate to schools and counties regarding their revenue, just so that the state can fund schools and counties at a higher level?

-Dustin Gawrylow, Managing Director

North Dakota Watchdog Network


Jason Flohrs: You’re Paying for Private Business Development

February 13th, 2017

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When it comes to where we live, there are few things more exciting than an announcement of a new business coming to town. Not only do we get the delicious delicacies of a new restaurant or the latest fashion of a new clothing store, but it’s also validation that the place we chose to live is a good one.

Local politicians are also big fans of new businesses, as it provides a tangible example of their value come election time. Unfortunately, many politicians have become too gung-ho about new businesses and are spending millions of taxpayer dollars to bring them into their towns.

Take Fargo, for example. The city has been using all manner of special tax maneuvers, ranging from tax increment financing districts (TIFS) to payment in lieu of taxes (PILOT) to attract businesses to the city. While the mechanisms for these programs are arcane and complicated, their purpose is simple- tax breaks for economic development. Since Fargo began using TIF’s as a financing tool for development it has committed almost $55 million of taxpayers’ dollars – and a whopping 43 percent has been committed in the last 5 years alone.

That’s a lot of money – about 7% of a city taxpayer’s property tax bill. Under pressure from local community leaders, Fargo recently “reviewed” its myriad of incentive programs, and they are set to adopt the “new” guidelines at a city council meeting on Monday. Unfortunately, this review amounted to little more than a rubber stamping of existing programs. Little to no actual reform was implemented, meaning the breakneck pace of incentive spending is unlikely to slow down.

Those supporting these existing programs often argue they are necessary to attract businesses and new development to an area and that they are of no cost to the taxpayers since without the incentive the business wouldn’t exist to pay taxes anyways.

This argument is wrong on multiple accounts.

Foremost, decisions to start or relocate a business is most often make in absence of the knowledge of any incentive programs. Its only after the decision has already been made for usual business reasons do the opportunities for incentives present themselves.

Take, for example, Fedex’s recent move from Grand Forks to Fargo. Executives at Fedex clearly stated they were planning to move to Fargo anyways because of air shipping schedules. Yet the city still saw fit to give away $620,000 of taxpayer dollars to a multibillion-dollar company. That’s money which could have instead been spent on police, roads and schools – the core functions of our local governments.

The assertion that the programs are also costless to taxpayers is also off base. There is an additional cost of the expanded public services that are consumed by the new entities the city is trying to lure, including infrastructure, fire, and public schools. When these costs aren’t picked up by the new entities – sometimes not for decades – they instead fall to other taxpayers to pick up the slack.

This isn’t just a Fargo issue. Lawmakers in Bismarck have begun a multi-year analysis of the state’s role in these incentive programs, and are signaling changes to come. The state has also spent millions in recent years trying to “buy down” local property taxes, but with tighter state budgets, that’s unlikely to continue. Ending these unneeded corporate handouts would be a much better way to actually get relief to taxpayers who need it.

City leaders need to take this draft back to the drawing board. The current policy “revision” will only perpetuate the problem, and put city taxpayers on the hook for millions more in economic handouts that 99% of businesses in the city will never receive. Instead, they should start to phase these programs out, shorten the terms of the city’s commitment, and limit the number of programs that companies can “stack” together.

Fargo is an excellent place to live in and grow a business – we can see that in the organic growth that is happening all across the city. Council members need to quick picking winners and losers and let the free market work, so all businesses and taxpayers can benefit.

Jason Flohrs