Currently viewing the category: "Tax Receipts"

Another month and another opportunity to see how fortunate North Dakota has been for these past few years, and how far off they are in the projections of revenues they have purchased.

First of all, concerning the revenues, even after some very large tax cuts put in place by the last legislative session and signed by the Governor, revenues are up by nearly 21 % compared to the same time as the last biennium.

Now that is just over 7 % of the projected amounts. Compared to what we thought we purchased some will say that is pretty good, at least compared to previous projections. However, as always, the devil is in the details, and I don’t think that is so good.

Sales taxes are off by less than 4 % and that is not bad. Auto purchases, or the revenues from them are off by less than 11 % and that isn’t bad either.

The other big categories are corporate and individual income taxes and they are off about 37 % and 42 %. That is, the revenues from these taxes are that much more than expected and yet the total revenue is only up about 7 %. That means that without those large amounts of extra revenue we would be in a deficit situation and that would be a critical situation, a very critical deficit situation. If the economy slows down with three fourths of the biennium left North Dakota will need its reserve revenues and the psychological effects of that will be very difficult on its economy.

I do not want to be the boy who cried wolf, but I think this proves again the critical need to get a better economic projection. We are, I think, living off our good fortune. We can not continue doing this, or so I think.

 

In Grand Forks and in several other cities in North Dakota the March city sales tax payments are down considerably from January and February. And then while the town is much smaller Devils Lake is even up a little and after being down for several months in a row, Minot is up, and by a lot. Across the state it is a mixed bag, and after this hard winter, difficult to assess.

I am not sure if we are seeing the beginning of the slow down in North Dakota that many of us have been expecting, or if the January and February payments were made quicker and now the adjustment for all the Christmas spending is over and it will take another two months or so for us to see the real trend for 2014. Both year to date and the 12 month rolling data are still positive.

There were some good signs in Grand Forks. Some are worried about the Canadian dollars relation to the U.S. dollar not attracting Canadian traffic, but the motel rooms and the restaurant and lounge quarter cent sales tax don’t support that theory, at least up to this point. Again this month I don’t have all the motel tax I want, but what we do have suggests traffic is at least as good as last year.

Grand Forks need to remember also that they should just not rely on Canadian Traffic. Now with all those new good class motels that the Convention and Visitors Bureau needs to work with places like the golf courses, the curling clubs, baseball clubs, etc to attract people to this city all year round. They can’t just wait for the Canadians. The Chamber and the CVB, which has always done a good job, need to be even more aggressive. The taxpayers of this city with the facilities like Aurora, and the University have all done a lot to attract people. Now they just need to be even more aggressive.

So, for now lets see if the city goes after those things. Lets also see if the oil patch business that has come from here stays here. There is no reason that done properly that won’t be case. There is no reason to let it go to others. It is time for some to earn their pay.

 

Here are two new reports.First is the North Dakota General Fund Revenues and Transfers for the biennium through December.

Below that is the city sales tax reports. It is in detail for Grand Forks, and then compares several of the major cities in the state. The sales taxes are for the checks the cities received on February 15th.

So, to begin, the state report:

We are now one-fourth of the way through the biennium and the collections are nearly 20 per cent ahead of last biennium’s revenues. Also, revenue is about 9 percent ahead of the projections the state bought. That doesn’t sound too bad, but the devil is in the detail.

In this case, major special fund transfers are already at their limit and so do not add to the error. Actually the three major funds we really need to look at are sales tax, individual income tax and corporate income tax.

The sales tax collections are only a short four percent over projections. That is certainly within expectations. Where the projections are really off is in both the individual and corporate income taxes, about 50 percent for both, and that is too much. If this keeps up the Governor and legislature will need to come into the session with a plan of what to do with the extra money. Of course if the ag economy turns out much worse than most of us expect we may be happy to have this money.

If a special session occurs that too may change everything. Because of all the problems I don’t expect that. In the meantime, you and I can only see what the leaders decide.

 

Yesterday when I posted the city sales tax tables I was missing some of the data for the 3 % motel assessment. I have that data now and have posted the data and my comments. You will find both in the posting immediately below this one. Also, I finally have all the figures for major North Dakota cities building permit numbers for 2013. Again, we can not necessarily compare the actual dollar amount, but the percentage changes are of use for comparison. You will find that table below in the posting about Grand Forks permit values for December 2013 and YTD..

Across North Dakota in 2013 more than 2025 passengers boarded scheduled airlines every week. That means that on average North Dakota added the equivalent of more than six weeks of business compared to 2012. The oil patch cities of Williston and Dickinson lead the way with an increase of more than 47% in Dickinson and nearly 152% in Williston. In the eastern cities Fargo had an increase of over 9% and Grand Forks greater than 8%.

It seems though that the airlines are always making changes that make it difficult for the particular cities to develop a plan to contribute to consistent growth. For example, after having slightly larger increases than Fargo all year at the very end two different airlines at each airport made changes that in the end gave Fargo a ever so slightly larger increase in passengers than Grand Forks. One airline pulled out of Grand Forks and another added seats coming into and leaving Fargo.

The so-called regional airports of Jamestown and Devils Lake continued their downward spiral. Devils Lake is trying to get the certificate transferred from the airline that flies east to one that flies to Denver. I believe they think since Grand Forks lost their Denver flights they will do better going to Denver instead of east. I think they are right. At least I think they need to try. They can’t continue on this years path.

Again, Minot has that slight decrease. As I have said every month I think that is from more seats available in and out of Williston and the end of Minot’s flood flights. I think when we reach that year anniversary of the additional seats we will see that turn around.

We are told that the oil drilling emphasis is moving from the northern part of the Bakken to the southern and comparing the Minot and Dickinson figures by the month to the YTD they seem to support that. Dickinson has the larger percentage increase in the nearby months while Williston has the larger YTD percentage. That tells me traffic has been increasing in the south as the year has been going on.

In any case, commercial airport economics in North Dakota is one of those areas that has really increased as the oil economy has grown. It is one of the real growth areas in our state. Other social and economic areas in those towns are much better than they used to be because of the oil activity. Thanks again Harold Hamm.

 

Yesterday when I posted the

I find the sales tax collections, especially the North Dakota city sales tax collections, to be confusing. It just seems to me that they jump around too much. Maybe that is the way people shop. I guess as a farmer it has not been my personal experience, but if that is not the case then too many businesses must not make their payments on a regular basis.

Look at Grand Forks’ payment for January 2014. Remember, the way this works this is suppose to be the taxes the store received during November 2013 then the store completes the report and sends it to the state tax department in December and the tax department sends the money to the city on the 15th of January. This months report says that Grand Forks had a nearly 22 percent increase in taxable sales in November 2013 compared to November 2012.

If you will recall I was beginning to worry because Grand Forks receipt had been declining through the latter part of 2013. I wrote that I thought perhaps we were seeing a serious slow down because of agriculture section. A slowdown that was earlier and more severe than many were anticipating. Even with the large increase in November the 12 month rolling total covering February 2013 through January 2014 only had an increase of about two and one-half percent. If we would have only matched the previous November we would have experienced negative growth at that point.

There are other things that are difficult to address. Viewing the table comparing cities around the state is one. We know we can’t compare totals as there are different rates in the cities, and even different products that are taxed. An example here is in Fargo. Their city sales tax in November of 2012 was only a percent and one half. Beginning in January 2013 they started collecting another half cent for flood control. If sales had stayed the same that means that 33 of the 44 percent increase was attributed to a larger tax rate. It appears that instead of having the largest increase by far they maybe have only had the second slowest increase. So, be careful how you interpret these. I will try to let you know when things like that occur. On the other hand, these lists over time can be helpful if we see one city or even section of the state heading in one direction and the other sections doing just the opposite.

The Grand Forks 3% motel assessment is up a very nice amount both for the month (November) and for the year-over 7 percent and 8 percent respectively. That is a lot of people who are in Grand Forks and every one of them is spending some amount of money. I have written before I imagine the credit belongs a lot of places, but I know from personal experience that the Convention and Visitors Bureau does a tremendous job of assisting organizations and people who are bringing these people to town. Grand Forks is well served by this organization.

In sum, for North Dakota things are still good. We continue to have a good economy both because of the oil and because of farming. Yes, things are slowing down, but they are still strong. For the oil, thank you Harold Hamm. Let’s give him our next Theodore Roosevelt award.