State sees growth in taxable sales and purchases; Grand Forks sees continued declined

Taxable sales and purchases increased last year in North Dakota, but Grand Forks revenues are going the opposite direction.

Fourth-quarter 2018 taxable sales and purchases increased 12.6% in North Dakota, concluding a year that saw the state finish 12.5% ahead of the previous year. Meanwhile, Grand Forks continued its downward trend, with fourth-quarter numbers that were down 13.6% from the fourth quarter of the year before and 12% down overall from the previous year.

North Dakota Tax Commissioner Ryan Rauchenberger released the 2018 annual report Tuesday morning. Rauchenberger said growth in the state is due to oil exploration.

"The farther you get away (from the western side of the state), the less impact oil will have on that," Rauchenberger said.

Parshall, a town southwest of Minot, saw the highest percent increase in 2018, with an increase of nearly 324% over the year prior. Rauchenberger said he couldn't say where the increase came from because the town, with a population of approximately 1,200, has such a small tax base.

Minot had an increase of nearly 4% in 2018. Bismarck saw a slight decrease of 2%.

"Bismarck saw decreases in retail and construction," Rauchenberger said. "But low ag commodity prices had a major impact on that."

The mining and oil extraction industry saw an increase of more than 40% and utilities saw an increase of 76% in the state. The large increase in the utilities sector could have been caused by construction, such as pipeline construction, Rauchenberger said.

The tax commissioner said he sees weaker ag commodity prices continuing to have a negative impact on non-oil-producing cities and counties.

Rauchenberger and his team predict the state will see continued growth, but at a more "moderate and sustainable pace" than the state is seeing now.

Grand Forks most likely will continue to see declines, but in the single digits. The city could eventually see some small percentage growth, Rauchenberger said.

"The effect of the U.S. vs. Canadian dollar will continue to be a factor," Rauchenberger said. "Grand Forks is dependant on outside spending."

Retail declines, weakened Canadian dollar

Rauchenberger said the main reasons for the decrease in taxable sales and purchases in Grand Forks are retail stores closing and the weakened Canadian dollar.

"We did see a weaker retail market, and part of that is due to the fewer options in Grand Forks in the local market for retail dollars to be spent," he said.

Also, Rauchenberger said more money is being spent online, which is reflected in statewide numbers but not necessarily in the local numbers. The local numbers are reflective of what gets spent in the community and stays in the community, Rauchenberger said.

Another factor in the drop Grand Forks has seen is the decrease in retail options in the city.

Fargo saw a slight increase of 1.4%, which could be affected by people traveling to shop at options there that have closed in Grand Forks, Rauchenberger said.

Statewide, the retail trade sector saw an increase of 3.4% in 2018.

Canadian shoppers play a large role in Grand Forks' tax statistics.

"The weaker Canadian dollar is absolutely a factor, more so than any other city, because Grand Forks is the first stop for Canadians coming down to North Dakota," Rauchenberger said. "We see that border crossings have decreased significantly and the numbers from our Canadian refund program reflect that."