Bismarck Tribune - Bismarck News - Voters to decide sales tax hike

Voters to decide sales tax hike

TOM STROMME/Tribune Kenny Leingang finishes concrete on the apron around the new Elks Swimming Pool on Tuesday. Leingang is an employee of Associated Pool Builders and said heÕs been working in the concrete business since 1958. ÒI was gone in the Army for couple of those years though,Ó he said.

May 14, 2006 - 08:58:20 CDT

By GORDON WEIXEL
Bismarck Tribune

Bismarck residents are being asked to decide whether they want to spend an extra half cent on every taxable sales dollar to pay for an ambitious list of projects that are part of the People, Parks and Places initiative.

On June 13, Bismarck voters will have the chance to amend the city's Home Rule Charter adopting the initiative, which would raise an estimated $32 million over the next six and a half years by raising the city's sales tax from 1 percent to 1.5 percent.

In addition to the city sales tax, the state levies a 5 percent sales tax.

There is a cap, with $37.50 being the most city sales tax collected on any one purchase.

Sixty percent of the funds would be dedicated to seven capital projects, 30 percent to improvements and enhancements of existing facilities, and 10 percent to acquisition of property. At the end of the time period, the sales tax will reduce to 1.25 percent with no sunset.

Longtime Bismarck businessman Steve Herman, owner-operator of A Action Movers, maintains the local economy is so robust, and is projected to be for several years, that there are other means to pay for the initiative. He is a former chairman of Bismarck's Vision Fund, which is dedicated to economic development, and in the past found himself on the other side of the fund-raising effort.

"I don't have any problems with the projects and feel they will be fine ... in time. But I also feel they should each stand on their own merits," Herman said.

"There are so many things going on in the economy that should be considered. Interest rates are going up, oil prices are at record levels, property values are escalating, sales tax collections are increasing, sales of homes is increasing and their median price is going up," he added.

Herman suggested that increased revenues from property taxes and increases in sales tax collections will be enough to pay for the projects. He notes that Bismarck's property values increased 13.06 percent this year, and in the first quarter sales tax collections increased 13 percent, and this didn't include the recent opening of two Wal-Marts and a Sam's Club in Bismarck.

"The bottom line is that increased property tax values and sales tax collections should be enough money to fund these projects as they are needed," Herman says. "There should be no additional half cent sales tax."

Dennis Kemmesat, a local businessman who is leading the People for People, Parks and Places group, contends that the additional dollars based on the 13 percent property value increase in 2006 will mean that the projects, some of which have been on the park district's list for 20 years, will wait another 10 to 20 years.

"Looking at the dollars generated based on the 13 percent property value increase would probably pay for the bleachers at the VFW arena, that's it," Kemmesat said. "Depending on what survey you look at, the average family income in Bismarck is between $40,000 to $50,000. A family that spends 20 percent of its income on taxable items, which is a significant portion, will be spending $4 more a month than they spend today."

Kemmesat added that there are a large number of people using the park district's facilities who aren't paying city property taxes, which adds to the argument that a sales tax is a fair way to raise money.

Park board president Dan Hovland said that if people look at the issue intellectually and honestly, it is unlikely the projects will become reality without the initiative.

The park district has a $13 million budget. About $5 million or 39 percent is from local taxes, and about 60 percent is revenue generated by program and facility charges. The 13 percent property value increase, if mills remain the same, will bring in between $300,000 and $350,000 to the district's general fund this year.

Attorney Bob Harms, who is opposing the sales tax increase, doesn't agree that there is a widespread need for the projects outlined in the initiative, though he said some are desirable. Harms said he thinks that in a year or two, greater needs will surface, and a possible funding source will have been dedicated elsewhere.

Harms also suggested that passing the sales tax increase would ultimately result in increased property taxes. The creation of new facilities, improvements to existing ones and additional acquisition of property will mean increasing the park district's budget for operations, maintenance, utilities and staffing.

Park district director Steve Neu said the only way the district can increase its general fund mill levy, which is 20.8 mills, is through a vote of the people. In 2005, the district's total levy, which includes pensions, Social Security, construction and special assessments, was 39.9 mills. He added that since 2001, the district's levy had increased by 1.8 mills, with the largest portion, 1.25 mills, going into the pension fund.

Harms also criticized the proposed sales tax increase as a regressive tax, placing an unfair burden on those who can least afford it - people on fixed incomes - and visitors to the city.

"The basic point is that people pay enough in taxes. Bismarck and its governmental entities get enough money for the things they truly need. If they are short in being able to provide everything we want, they have to set priorities," Harms said.

"I have a hard time believing in the comments made about this being a regressive tax," Neu said.

"Regressive means to fall, step backwards. I look at this as being progressive. Are licensing fees and gas taxes regressive? Through this method, public recreation is provided at a greater level. People who don't have the means to join private clubs will have the opportunity to participate in park district programs in a less costly manner. The park district has a tremendous amount of low-fee programs and this will allow that to continue," Neu said.

Harms said he disapproves of the "Christmas tree" approach the People, Parks and Places initiative takes. He said the main reason projects such as the city's north side fire station, school district's career and vocational center, and Bismarck's transit system were included was to broaden the base of support among voters. Harms said there is available money to fund these without raising taxes.

Hovland said there have been several misconceptions about the initiative and park district that have been spread throughout the community.

"It's been suggested there has been little planning done by the park district. I've been on the board for 12 years. I look at how the community has progressed through that time and the significant improvements attributable to Steve's (Neu) vision and proactiveness,"Hovland said. "His spirit has filtered down through the board members, and we have a common vision to pursue the best recreational opportunities on behalf of the community. That is the heart of the initiative."

Hovland also points out that Bismarck's sales tax is currently lower than 22 other cities in North Dakota. Fargo, Dickinson and Valley City are at 1.5 percent; Grand Forks is at 1.75 percent; and Minot and Jamestown at 2 percent. Mandan's is at 1 percent.

Herman, who also owns a business in Fargo, said that city's sales tax is being reduced to 1 percent and he has been told to stop collecting anything above that on July 1.

The half cent Fargo dedicated to its library sunsets July 31, but there is a ballot measure to add a half percent sales tax for infrastructure needs, according to city finance director Kent Costin.

Kemmesat, Neu and Hovland said that should each of the projects be taken on separately, it would tear the community apart as user groups squared off over the projects.

The initiative has brought these groups together working for a common cause in which they all benefit as well as all of Bismarck, according to Neu.

"It's been suggested we rely on private money to fund these projects," Hovland said. "I don't believe that's possible. We've been fortunate to have tremendous support of user groups and have worked closely on capital projects. We will continue to rely on private donations, but to suggest it can all be funded privately is unrealistic."

Neu said there are many fundraising organizations and only so much money available. Putting private donations into these projects would impact other organizations drastically, having a bigger impact on the community than the sales tax increase does.

Many park district offerings are at or near capacity, according to Neu, and without the projects funded by the initiative, it will be difficult if not impossible for the district to keep up with Bismarck's projected growth and the opportunities people demand.

Hovland said that in 2005, Bismarck's three public golf courses accommodated 87,000 rounds of golf, a number well above the 25,000 rounds annually played at an average Midwestern golf course.

He added that Bismarck golfers under age 17 are allowed to play one morning each week at any of the Bismarck and Mandan municipal golf courses for free, and over 2,000 young golfers have taken advantage of the offer.

"There is no question we need to build another golf course to meet increased demand," Hovland said.

Bismarck's youth baseball program and adult softball programs also are seeing growing numbers and unless more facilities are provided many face the chance of not playing or advancing to a higher level of competition, according to Kemmesat.

Mandan park district director Cole Higlin has raised the question of duplication of services and worries that Bismarck facilities will take away business associated with swim meets and rodeos.

Kemmesat said Mandan facilities, such as the community center swimming facility, cannot meet the needs of Bismarck and it's unrealistic to consider using the Mandan pools for Bismarck swim teams.

Regarding fears Mandan might be passed over for hosting the state high school swim meet, Neu said the North Dakota High School Activities Association awards meets, which are usually rotated among sites.

It isn't the intention of the initiative to go into competition with Mandan, according to Neu, but rather to provide for Bismarck residents.

Neu said that enhancements to the Missouri Valley Fairgrounds, with the possible upgrading of the arena and construction of an indoor horse riding facility, aren't meant to compete with Mandan, but to fill a definite need for a growing group of horse owners.

"There is a legitimate need for every project in this initiative. This was determined through all the meetings we held with user groups and the public. These facilities are desperately needed and there's not one that is of greater need than another," Kemmesat said.

But Harms and Herman aren't convinced. Harms said he thought there was a lack of public discussion on the pros and cons of the measure, so he's attempting to shed more light on the issue.

"We need to show how it's structured, its impacts. There are different ways to meet the asserted needs. That debate is beginning to occur," Harms said.

"We definitely want to maintain the quality of life we enjoy, but an increase of the sales tax is not the way to get there. It will likely detract from getting there. People are working harder than ever for their money and deserve to keep it. I'll never believe there is only one solution to a perceived problem."

(Reach reporter Gordon Weixel at 250-8255 or gordon.weixel@;bismarcktribune.com.)

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Comments

Mike wrote on May 17, 2006 12:52 PM:

" It is great to see so many citizens having opinions on these issues. One thing I didn't see mentioned though is the fact that the PPP initiative has nothing in the budget for operational costs. We all know that there is overhead in running a business. With no overhead figured in, that means the money needed to subsidize operational costs is ALSO going to have to be paid by the taxpayers. Without another sales tax increase to subsidize those losses, the only other option to pay for those is going to be a property tax increase. So the $4.00 per month Mr. Neu tells us about is just to build the buildings! What about operating them? I would appreciate it from both sides if all the facts came out instead of just what they think the people want to hear to get their way. I plan on voting NO on this issue just because of the lack of "surety" of the feasibility of running these entities profitably and not at the taxpayers expense. Like one man said recently, "Government that is big enough to give you everything you want, is big enough to tax everything you've got!" "

BOB wrote on May 15, 2006 2:32 PM:

" Much has been said about the PPP and the proposed sales tax increase. In my mind, there are more questions and comments than there are answeres and responses. I would like someone to answer some questions and provide some comments. 1. I have heard the Park District is sitting on a sizable bank balance. In fact I have heard the figure is in the area of 10 million dollars. Is this true? If it is not true, what are the correct figures for reserves balances? 2. I have also heard that the utility bill for the "bubble" during the winter months comes in at about $10 to $15,000 per month. What are the actual heating and cooling costs for the structure? And, if the costs are substantially more than the income, should management be looking at its operation from the eyes of "cost effectiveness"? 3. Lastly, not much has been said about increasing the user fees. If almost 90,000 rounds of golf are played during the season, an increse by 1,2,3, or 4 dollars per round would generate substantial revenue. Apply a similar formula to softball players, tennis, swimmers, etc. and you are talking real money. Increasing user fees would take away the argument of many non-users subsidizing the users, who generally have more resources (in terms of time and money), and for that matter who may not even be living withing the Park District. BOB "

DM wrote on May 14, 2006 7:01 PM:

" I haven't decided one way or the other yet. Although, as a business owner, it feels like it is a price increase to my customers which I have to impose. We have high property taxes already, and the additional sales tax money does add up. Why not see what the impact of all the additional big box stores has on collections without the additional percentage. Wouldn't it be better if we didn't need to increase, and still be able to complete those projects? "

Bob the Builder wrote on May 14, 2006 5:31 PM:

" I'd also like to point out that as property values increase it may be possible that the price of buying land for parks also increases. "

Bob the Builder wrote on May 14, 2006 5:30 PM:

" DM: I thought the same thing when I first read the, "Regressive means..." but if you bother to read further, its quite clear that Steve Nue knows perfectly well what a regressive tax is. See: "People who don't have the means to join private clubs will have the opportunity to participate in park district programs in a less costly manner." DM, you are correct that a sales tax is technically a regressive tax but what Mr. Nue is saying is that the "People Parks and Places" initiative is a progressive program. Now, to the PPP initiative: I've lived in many cities across the country and from that I can tell you one of the biggest things that sets Bismarck apart from those cities (and made me come back) is the abundance of trails, parks and youth programs. Bismarck has the option of to turn into another undistinguishable strip mall farm or to keep and improve upon our city of greenways, trails and parks. I for one think the later option is worth my $4 / month. "

DM wrote on May 14, 2006 10:28 AM:

" Mr Neu states: "Regressive means to fall, step backwards. I look at this as being progressive. Are licensing fees and gas taxes regressive"? The answer to that question is YES THEY ARE. Steve, in order to understand what a regressive tax is, please read the following definition from Wikpedia: A regressive tax is a tax which takes a larger percentage of income from people whose income is low. Often it is a fixed tax — every person has to pay the same amount of money, such as a poll tax (a “head” tax, which may be a tax to vote). Alternatively, it may be a tax on consumption such as VAT. A regressive tax places proportionately more of a burden on those with lower incomes. Regressive taxes, as opposed to progressive taxes, are more burdensome on lower-income individuals than on higher-income individuals and corporations. "

Wondering wrote on May 14, 2006 7:02 AM:

" If Bismarcks tax is lower than everyone else isn't that good for us? I guess if you are in government there never is enough money to spend and the more you get the more you can spend! How long is it until elections???? "

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