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Fargo leaders OK 2018 budget as property tax hikes draw ire

FARGO — Before city leaders passed their 2018 budgets Monday night, Sept. 11, they got an earful from homeowners reeling from double digit property tax increases.

For many, their valuations went up significantly just as the state became less generous with property tax relief.

"You wanna drive me out of my house, you're doing a good job," said Greg Schnell, who noted that his tax bill will go up close to 20 percent.

Kim Gould, who recently bought her first home as a single divorced woman, said she was surprised to learn her tax bill would go up significantly. At age 55, she works two and a half jobs and couldn't see herself continuing that as she ages, she said. "I'd like to be a part of this growing economy, purchasing things and making things better. But with these type of things happening, I only see myself going backwards."

Mayor Tim Mahoney said city leaders, aware that homeowners are feeling the pinch, plan to cut the tax rate by 2 mills for a total of 51 mills in 2018. Local governments, including the city, are cutting more than 11 mills, he said.

"Our budget was fairly flat, and we dropped the mill by 2," said Deputy Mayor Dave Piepkorn. "I'm very comfortable with that."

The proposed $96.4 million general fund, the main operating fund that property taxes go into, will be 0.7 percent higher than this year's budget. The overall budget of $290.5 million, which includes utilities, debt service and pensions, will be 9.4 percent higher, most of which are expenses incurred by utilities and the airport.

City Commissioners voted 4-1 to pass the budget. Commissioner Tony Gehrig, who pushed to cut another mill by reducing cost-of-living adjustments for some staff and spending more of unallocated funds, was the lone dissenting vote after failing to gain support from other commissioners.

Tax bills are already expected to go up even without increases in valuations because of a change in the way the state offers property-tax relief. Lawmakers decided this year to eliminate the 12-percent buy down of property taxes and offer to pay for county social services instead. In Cass County, that is equivalent to a 3.5 percent buydown of property taxes, County Auditor Mike Montplaisir has said.

Piepkorn said lawmakers failed to pass comprehensive tax reform in recent years and chose to just buy down taxes with oil revenue and there's just not much of that money any more.

Homeowner Juliette Fiechtner and others complained the city has given too many tax breaks to businesses, suggesting reducing these would lead to lower tax bills.

Gehrig agreed saying tax revenues would be 7 percent higher without tax breaks.

Mahoney said many tax breaks go to new homebuyers, disabled veterans and low-income seniors. Tax breaks for businesses encourage investments that yield much higher tax revenues than before once the incentives expire, he said.

Fargo City Assessor Ben Hushka found some homeowners' whose valuations didn't go up at all and noted that the ones living within the Fargo School District will see their tax bill go up 9 percent. The ones living in the West Fargo School District will see theirs go up 7 percent.

He told The Forum he suspected that many who complained Monday saw more than that because his department recently scrutinized their neighborhood.

With limited manpower, he said, his staff will generally calculate valuations by doing statistical analysis of the homes sold in most neighborhoods and save the door-to-door assessments for neighborhoods where that method doesn't appear to work as well.

State law requires the assessor to ensure valuations be at least 95 percent of sale prices, so every year Hushka's department has to do a comparison.

He said neighborhoods where the valuations were much lower than sale prices will require extra scrutiny, which often reveals that they've been undervalued for several years.

It so happens that they're playing catch up in a year when tax relief is less generous.

Tu-Uyen Tran
Tran is an enterprise reporter with the Forum of Fargo-Moorhead. He began his newspaper career in 1999 as a reporter for the Grand Forks Herald, now owned by Forum Communications. He began working for the Forum in September 2014. Tran grew up in Seattle and graduated from the University of Washington.
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