AS I SEE IT
By Neal A. Shipman
Farmer Editor
While the Watford City City Council may be just starting to look at whether or not it will ask city voters to remove the $25 cap on the city sales tax, it is my opinion that this cap should have been taken off two years ago when voters overwhelmingly approved increasing the city’s sales tax to 1½ percent.
I, along with a few others, urged the Home Rule Charter Committee and the city council that at the same time that the voters were being asked to increase the city sales tax from one to one and a half percent, they should have also been asked to remove the $25 cap. My logic, at that time, was that the cap really didn’t make any difference to the average person shopping in Watford City as most purchases didn’t trigger that cap.
However, it was the council’s decision to leave the cap alone and only focus on increasing the tax in the June 2016 election. I respected that decision as it wasn’t worth clouding the issue.
But now as being reported in a front page story this week, that decision two years ago to leave the cap in place has proven to be very costly to the Rough Rider Fund, which is the recipient of those city sales tax dollars.
While the vast majority of people who are paying the city sales tax will never buy enough in any one purchase to trigger the $25 tax cap, that is not true when it comes to developers who are building multimillion dollar projects. For them hitting that $25 maximum sales tax cap happens with virtually every purchase that they make on the office building, apartment or other construction project.
By law, if anyone paid in too much in city sales tax when their purchases exceeded the $25 cap they can request the state to refund the amount of overpayment.
And in the past year, the city’s Rough Rider Fund lost to the tune of around $350,000 in funds that had to be refunded.
And that loss of Rough Rider Funds definitely caught the eye of city officials who rely on a steady stream of city sales tax funds to meet the debt obligations that the city committed for the construction of the Rough Rider Center and the new McKenzie County Healthcare Systems replacement facility, as well as to other infrastructure projects.
Since its creation, the Rough Rider Fund has been used to help build many of the projects that residents of the city have become used to enjoying. In addition those city sales tax funds have also been used to build and pay for many city infrastructure projects without requiring the city to ask residents to pay for those improvements via high property taxes.
The logic of having a $25 city sales tax cap didn’t make sense when Watford City first enacted its sales tax. It didn’t make sense to keep it in the law two years ago. And now, the consequences of leaving that cap in place are being felt.
It is time for the $25 city sales tax cap to go away.
I would encourage the Home Rule Charter Committee and the city council to proceed with bringing this issue to the Watford City voters in the June election.