Grand Forks County representatives make the case for adopting home-rule charter
The Herald's editorial board this week met with a group that outlined how home rule would work in Grand Forks County, if voters approve the idea. One thing they stressed was that funds are needed to pay for improvements to various county properties. Below is a Q&A that might help answer a few questions regarding the process.
GRAND FORKS — Members of a committee that plans to put a countywide proposal on the November ballot have a message for Grand Forks County taxpayers: Property taxes are going up.
But if voters approve a home-rule charter in the county, the committee members say those higher property taxes can be eased through a half-cent sales tax that can only be enacted if the home-rule proposal passes. If it’s passed, the new tax is projected to raise approximately $5 million per year, with a sunset in 20 years.
“Property taxes are going to go up, but they will retreat back to where they were if the sales tax is implemented. They’ll go back to, in essence, where they were this year,” Grand Forks County Commission member Tom Falck said. “The commission might have to increase a mill or something like that for salaries, maintenance or just general working in our budget. But those six mills, that's going to be taken care of by the sales tax.”
Whereas the question about adopting home rule in the county isn’t just about a proposed new sales tax – other changes could come via home rule as well – the county’s Home Rule Charter Committee is quick to note that money needs to be raised to pay for infrastructure upgrades to public properties, such as the roads, bridges and culverts; the juvenile detention center; and the Grand Forks County Correctional Center.
The funds must come from somewhere, the committee members say – whether through taxes paid by property owners or by a sales tax that would spread the burden to nearly all county residents, as well as visitors who pass through but yet use public resources and property.
“We have one pot of revenue: property taxes,” said Grand Forks County Administrator Tom Ford. “We get some state aid, we get some grant funding, but primarily our operating budget is made up of property taxes and we’re seeing mounting needs in the county, also for infrastructure. And it’s infrastructure that's used by homeowners as well as people that are not homeowners and people that don't live here but use that infrastructure.”
Under state law the county cannot, at present, enact a sales tax. To do so requires a county to change its governmental structure to home rule, which allows for wider ability to govern from within, including referendums, new taxing structures, adding term limits to commission members and the like.
In a meeting this week with the Grand Forks Herald’s editorial board, a handful of county officials – including Ford, County Commission members Falck and Bob Rost, and Home Rule Charter Committee members Bob Drees, Kyle Kvamme and Kathryn Kester — outlined what they consider the merits of home rule. Their plan is to review a survey that’s been sent to county residents (it’s due back on July 6) and then fine-tune the proposal in hopes of putting it on the ballot in the November election.
While home rule isn’t necessarily being pursued solely to enact a new tax, it’s a big part of the committee’s rationale. Even with home rule, a sales tax increase still would need to be approved by voters.
A dozen counties in North Dakota have adopted home-rule charters, providing something of a blueprint for other counties to follow, members of the committee said this week.
“I think it's amazing what these other big counties are doing that have home rule and are able to accomplish – getting these buildings, jails, roads and (flood) diversions built,” Rost said. “And we just sit back and we assess the taxes to the (property) taxpayer to do what we need to do. And that's not right. It's just not right.”
If home rule is approved and if voters subsequently agree to raise money for the county via a half-cent sales tax, some essential purchases would be excluded, including groceries, house trailers, farm machinery and natural gas.
Along with being County Commission members, Falck and Rost also are part of the Home Rule Charter Committee. Ford and State's Attorney Haley Wamstad are staff support to the committee.
Below is a transcript of the hour-long conversation with the Herald’s editorial board Wednesday at the Grand Forks County Building, edited for brevity and clarity.
Q: What can a home-rule charter do for a county?
Falck: The charter is relatively broad. So when I look at something like this, I look at, hopefully, 25 years in the future and this provides aid to the commissioners and the citizens of the county on issues that we may not even anticipate at this stage. This, I think, gives the county more ability to deal with problems that come up. It allows us to control anything that Bismarck doesn't maintain control of. Once in a while we have someone come in, we have a lot of small housing areas, and they have problems out there. And there's really not much we can do to help them if they've got one.
I think a few years ago, we had a very serious noise issue and partying going on, etc. And there weren't really any controls for us, other than the sheriff coming out again. But that didn't solve the problem.
Q: With home rule, what would change on a problem like that, though?
Falck: We could draft an ordinance to assist people with the problems that they're having. Just like the Legislature, we can come up with an ordinance.
Q: Is new revenue the biggest factor of home rule?
Falck: The revenue, that's a real concern for us on these building projects. Our juvenile detention center, we've known for a long time it's been inadequate. Twice since I've been on (the commission), we’ve put money into it. And each time the architects and engineers say, “Why are you doing this? This building needs to come down.”
And our expert on correctional centers is anticipating we're going to need another 120 beds over the next 20 years. They're running at capacity, functional capacity, so to speak. So we're going to need to add on to that. The commissioners approved six mills that will go on the tax rolls next year to go toward the detention center and then any beds that we can add on.
Q: You mean, if home rule is approved?
Falck: No, that goes on property taxes. And that's part of why we want to address it. It goes on property taxes, but it's again, it’s not going to be sufficient to solve the problem. We can assess up to 10 mills – another four – but our commission doesn't want to do that. That's too much burden on homeowners. So, one thing under home rule that would happen is we would ask for a one-half-cent sales tax, which we project, based on the city's revenues on sales tax, would raise about $5 million a year. Of that, 60% of that money would go toward the building projects – the detention center and the correctional center. I haven't even mentioned the sheriff's department, but the city has told us they’d like them out of there in about five years and that was a couple of years ago. So that 60% would take care of that, I think adequately. Also, 20% of the money would go to additional property tax relief. And 20% of the money would go to the highway department for roads, bridges, infrastructure in the county, and that is a significant issue. Our highway engineer has got a long-term plan to replace culverts, roads, bridges.
So the half-cent sales tax, if we are able to get that, then we would take the (increased) mills off the property tax. That would replace that. People have mixed emotions on sales tax, but we have a substantial amount of tourism in this community. And when all of us travel, if you go to Fargo, you're paying a one-cent tax for their diversion project and for their correctional center. But if I'm paying for the correctional center in Fargo, I think it's fair that people that come into our community pay for that also.
Q: The committee has discussed “20% property tax relief.” Is that actual relief, or is it actually from not raising property taxes?
Falck: That's a good question. You can't really project that. Ideally, it would be for property tax relief, but depending on the circumstances, it might stop property taxes from going up. It's hard to project right now.
Q: Just to be clear, my property tax isn't going to go down if this proposal is passed. Is that correct? This would just keep it from going up as much in the future as was probably needed to pay for some of these things that we’re talking about?
Falck: Your property taxes are going to go up next year, six mills, because of (upcoming projects). If this home-rule proposal was passed, depending on when it was implemented, that would bring that off sometime next year, hopefully.
Ford: You know, another way to look at it, too, is this way: When we're planning for capital improvement projects, such as roads, bridges, the courthouse, HVAC systems, parking ramps, all that capital improvement funding is coming out of property taxes. And so that's just more money coming from the mills. One illustration we've been using is if you can take those capital improvement dollars from the sales tax generated toward those capital improvements, capital construction projects, now you're not needing to go to the mills, the general fund, and it's coming from a different source. So there can be no guarantee that property taxes will be reduced, but it’s about hoping to definitely keep them more stable.
Falck: The bonds for the addition on the correctional center, and for building the detention center, will be 20-year bonds. And I would be somewhat optimistic that this sales tax would pay this off faster than the 20-year bond.
Ford: We're the shopping and economic hub for the region. (Visitors) are using our roads or using our bridges. They're becoming guests of ours in the correctional facility. And so the property owner, anyone who owns a home, is footing the bill to keep up all that infrastructure. But those who don't live here, but come shop here and use the infrastructure, they're using it, but not having to contribute to improving or maintaining.
Rost: I think it's amazing what these other big counties are doing that have home rule and are able to accomplish, getting these buildings, jails, roads, diversions built. And we just sit back and we assess the taxes to the taxpayer to do what we need to do. And that's not right. It's just not right. We have a lot of people coming in here from Canada, all over the country that can help pay to do some of these days. And if we can take some of these property taxes and reduce (the burden) with that 20% I think every taxpayer in Grand Forks county would be in favor of that
Q: This has been voted on before?
Ford: Two times previously (both failed).
Q: What's different this time?
Ford: The difference is the commission and the Home Rule Charter Committee are being much more proactive. They have really taken the time to get a really strong draft. They are surveying the constituents of the county to hear what they have to say, and including the constituency in the process. And based on how the survey results come back, I think you're going to see a revisit of the draft.
I think the (committee) is willing to get out and talk to people and inform them that this is why the county's looking at a home rule charter form of government. (In the past) they didn't get out and tell the people why they just went for it and put it on a ballot without communicating. So I think that's the key difference.
Rost: I was around then. One of the big issues was the fact that people thought they were not going to be able to vote for their sheriff, their state's attorney and the other offices that run county government. And people want a say in who holds those offices. There was so much negative going around (with people thinking) “well, we want to vote for the sheriff, we're not going to vote for home rule so you can appoint the sheriff.” We’re not going to do that.
Q: But could you do that with home rule?
Falck: No, the sheriff and the state's attorney, under state law, will always be elected. That will not change under home rule.
Drees: When we first started, we took a look at at least six other home rule charter counties around the state. We looked at all that and saw what would fit for Grand Forks County and what wouldn't fit. We want to look at all the advantages of home rule charter, with or without sales tax. And the other thing we wanted to make sure of was if there was going to be a sales tax, as part of this charter, we wanted to make sure that it was on all the items that would be congruent with the city’s sales tax. So that you wouldn't have some items that were attached from the county level and not on the city, and vice versa. As a committee is concerned, we don't really have a feeling whether the sales tax should be part of it or not. Our charge was to come up with the charter. We're leaving it up to commissioners whether they want to have it, because they might want to pass the home rule charter without the sales tax in it and then do the sales tax at some other point in a separate vote. One of the things that we've talked about before was this referendum (ability). That'll be something that would be new to the county.
Kvamme: For me, there are two motivations on why this is needed. One is the opportunity for more local control. It will allow county ordinances, will allow term limits, will allow items to be referred to the public. Right now, if there's an issue, the county citizens have no recourse. So let's give the county citizens more control, more opportunity there.
And then there's finding an alternate revenue source outside of property taxes. We are going to pay six mills – that's been decided. Our taxes are going up. Do we want those six mills to go away? I see that as a property tax reduction, just by having that go away.
And then knowing that you're going to have 20% then further reduce additional property taxes, which we know everything, due to inflation, is crazy right now. So even if that just helps slow the increase down, I still see that as a reduction, because we're using sources from people visiting our community to pay t those costs that normally will be incurred by property holders.
We have (visitors) that are using our roads, that are using our facilities and being policed by our county sheriff, why not have them contribute? It just doesn't seem like there's any reason to push back.
Q: As far as feedback you're getting, has it been positive?
Ford: It's a mixed bag. I'll go back to the community town hall (meeting recently held) – I counted that as a positive, because we had a good turnout, folks came with good questions and rightful concerns. And I thought that this group was able to address those as they came up, and the folks that attended, listened and took it in. Not everyone's going to be a yes. But I'd also say that for every person that I chatted with that is no, there is another person that says, “Oh, that makes sense to me.”
Falck: And most of the time when you have a town hall meeting, or any type of meeting about something such as this, the majority of the people are coming because they have concerns about it. You expect that you're going to have concerns.
Q: What are the rightful concerns that you’ve heard?
Ford: The most consistent concern is “the county's just going to start raising taxes. They want to do this to raise taxes.” But the County Commission cannot just willfully enact new taxes – they have to put those before the voters and the voters have to say yea or nay.
Falck: Also, there's been concern that the correctional center hasn't been kept up or taken care of. That’s not true. It's just not big enough for our community.
Q: Just to be clear, you can already raise taxes, yes? Property taxes, mills?
Falck: Yes, to some degree, with general mills, we can go up to 60 and we’re at about 48.
Q: So you can raise taxes, but you just can't raise sales taxes, right?
Falck: Right. Property taxes can go up fairly substantially. There's a separate number of mills we can raise for roads and bridges, there's a separate number for the general fund and there's a separate number for capital improvements. And the capital improvements has a maximum of 10 mills and we are raising at six. We can raise that four more but we don't want to do that.
Q: So you've got the ability to raise taxes. Really, what you’re proposing is the ability to raise taxes in different ways, correct?
Falck: Correct. In a way that's less onerous to our 70,000 citizens.
Rost: We want everybody to pay. Not just property owners,
Kvamme: If the county wanted to just go tax crazy, they could have already done it. (County leaders) are not doing this for fun. The easy way out is to just leave it be and let their terms go, right? The hard way is to try to make change and bring this to the public and introduce new revenue sources. Some folks that I've talked to are just skeptical that they're just power hungry. Well, it’s the exact opposite.
Q: Will it be on the ballot in November either way, no matter what the survey says?
Falck: Yeah, I think the survey might give us an idea of what the populace, if they'd like something additional in it, and some idea where they're coming from.
Q: And to be clear: Property taxes will increase without home rule?
Falck: On the capital improvements and building projects, the state allows up to 10 mills. That's a decision of the commission as to how many of those mills will be used. That already happened. It’s gone through.
Q: But if home rule and, potentially, the new sales tax get pushed through in November, what would happen then?
Falck: We would still have to use the bonding company, because you're going to have to pay – you're borrowing money. So then that sales tax money would be used to pay the borrowed money rather than the six mills taxes. So that would go away.
Q: Thus the property tax relief referred to earlier?
Wamstad (to Falck): But just for clarification, you have not utilized the full 10 mills. If this fails and they need more money for these infrastructure needs, it could be the five commissioners that could decide to utilize those full 10 mills.
Q: Without a vote?
Q: Is it incorrect to say that your message is this: Property taxes are going to go up, but home-rule charter could allow the increase to be eased through sales taxes?
Falck: Property taxes are going to go up, but they will retreat back to where they were (if the sales tax is approved) although the commission might have a mill or something like that for salaries, maintenance, or just general working in our budget.