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Grand Forks leaders disappointed at sales tax defeat; water rate hikes on horizon

This story has been updated Grand Forks' push for a sales tax increase, touted as a key step to improving a growing, increasingly vibrant city, has failed. Now comes the hard part: building infrastructure budgets that don't include the income. Ac...

Grand Forks City Hall (Herald photo/Sam Easter)
Grand Forks City Hall (Herald photo/Sam Easter)
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This story has been updated

Grand Forks' push for a sales tax increase, touted as a key step to improving a growing, increasingly vibrant city, has failed.

Now comes the hard part: building infrastructure budgets that don't include the income.

According to the North Dakota Secretary of State's website, voters turned down a measure to increase Grand Forks' sales tax by 0.75 percent, earning only 44 percent of the 22,142 votes cast. It would have generated an estimated $7.75 million per year upon its inception-lasting 50 years-but city officials now are faced with less income than they'd hoped to fund a range of infrastructure projects, from a water treatment plant to road and street projects, as well as hoped-for items like an underpass at 42nd Street near DeMers Avenue.

"I think it's a significant setback," City Administrator Todd Feland said. "We don't do things lightly, but the voters have spoken."

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City staff members said Grand Forks services will keep flowing-there's no change to funds for items like garbage collection or emergency services-but city Finance Director Maureen Storstad said missing the sales tax means the city likely will cut spending and increase revenues in the near future.

Projects like the water treatment plant and the city's contribution to the Red River Valley Water Supply Project, an anti-drought pipeline that would bring water from the Missouri River to communities in east North Dakota, are vital projects that will still be pursued, city leaders have said. As a result, Storstad said, the City Council is expected to raise 2017 water rates next year by 9 percent, instead of the 2 percent increase in the initial budget.

The change would likely come within the next several weeks.

The increase is twofold. Charges on water meter hookups vary in size, but Storstad said an average home's bill is expected to shift from $7.59 to $8.29 per month. Water billing per 1,000 gallons consumed is expected t o shift from $3.92 to $4.27 per month.

Higher increases than might have occurred with the sales tax in place are expected to persist for several years.

"You're still going to get good, clean safe water, it's still a different means of paying for it," Storstad said of the shift to pay for the projects. "But instead of sharing it through the region with the sales tax, it's going to be with the water bill."

The project also means nonessential infrastructure projects-like road maintenance and construction, or an additional Interstate 29 interchange-will have to be approached more slowly in coming years, with projects shifted from the backburner as money is available. Feland raised the possibility of shifting special assessment cost-sharing rates on some of those projects to property owners.

City Council member Ken Vein said he saw the vote failure as a product of various factors. Given the relatively technical nature of the tax, the fact that voters were being asked to vote on infrastructure-an abstract, relatively unexciting item-worked against the measure, he said. That, combined with voters' natural reluctance to raise taxes on themselves, appeared to have been too much for the measure to pass.

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Feland agreed on many of those counts, mentioning the tax was phrased perhaps too vaguely and extended too far into the future for some voters. But with the recent British exit from the European Union and Donald Trump's victory Tuesday night, among other events, voters around the world have recently rejected what might be branded as big-government thinking, he said.

"Maybe it was too much, this time and place," Feland said.

The failure of the tax also raises questions about the future of a new Grand Forks Public Library. A city committee's research on a location was put on hold in advance of the election to avoid the impression the sales tax vote would fund the library, which was a polarizing issue this summer. But the fact remains, Vein said, sales tax revenue of some kind was considered a primary component in funding a future building-be that from a future tax increase or a portion carved off of the tax that failed to pass last night.

"I'm still trying to figure that one out," Vein said. "I don't have an immediate answer to where that goes because I'm trying to understand what the message was here. The library was an important issue here for us, but it still has to have funding."

Vein pointed out the show will go on-city staff will keep showing up to work, regardless of the lack of an increase in sales tax.

"For me, this is the wishes of the citizens, and we, of course, will abide by that," Vein said. "We're not going to have sour grapes ... we will continue to deliver top-notch services the best we can and still in the most cost-effective way regardless."

 

Related Topics: TODD FELAND
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