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Gehrig: It's time to fact-check some assertions about the use of tax incentives

There have been a lot of assertions being thrown around lately surrounding the use of incentives. I would like to take a moment to fact-check some of these statements. The scale will be: True, Mostly True, Mostly False and Pants on Fire.

Tony Gehrig David Samson / The Forum
Tony Gehrig David Samson / The Forum

There have been a lot of assertions being thrown around lately surrounding the use of incentives. I would like to take a moment to fact-check some of these statements. The scale will be: True, Mostly True, Mostly False and Pants on Fire.

• Economic incentives helped bring downtown Fargo back: Mostly True! I have always said incentives can and should be used for a limited time and scope when there is an area under threat of failing. The difference here is that proponents take incentives too far. We see incentives continue to expand in time, scope, and intensity despite the fact that downtown Fargo is the most valuable land in North Dakota and not at all blighted. Perhaps after 20 plus years of laser focus on downtown, we should let it stand on its own, and help other parts of our city.

• Removing incentives would be catastrophic: Pants on Fire! In Fargo the vast majority of economic development goes on without incentives. In downtown, 66 percent of companies have never received an incentive. It is complete and utter nonsense to claim that Fargo is booming simply because of incentives. Lowering property taxes across the board would be far more beneficial.

• Indefinite incentives in one part of Fargo hurt the rest of Fargo: True! If we see growth where we reduce property taxes, it must also be true that we see less growth where we increase property taxes. That is how incentives work. Government picks who will win and who will lose. For the vast majority of you reading this, you lose.

• Incentives raise taxes on everyone else: True! When the Fargo Commission grants an exemption, we as a government don't lose a dime. How? We just charge everyone else in the city a little more to make up for what the recipient isn't paying.

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• Economic incentives directly impact school funding: Mostly True! Tax Increment Financing was used for such large projects as Block 9 and the Roberts Street ramp. With a TIF, instead of paying property taxes, they pay back the loan that the government gave them as the incentive. Wouldn't it be great if you could pay back a loan to expand your garage instead of paying property taxes? Dream on peasants...these aren't for you.

• The free market can't sustain infill: Pants on Fire! If infill is the most economic and demanded type of growth, as we have been told it is for many years, then the consumer will seek it out and buy it. That is how the market works whether buying real-estate or scrolling through Amazon.

• Without incentives Block 9 would never have happened: Mostly False! Perhaps Block 9 wouldn't exist in its current form, but to claim the project would never get off the ground without incentives ignores so many other factors. The reality is Block 9 could have absolutely happened without the $22 million that the taxpayers kicked in. The project will be profitable from day one. But if I am wrong and Block 9 or other projects are not able to survive without tax dollars, why are we still propping them up? We should seek out and promote market-based growth that is viable over the long term. We do that through low, sustainable and predictable taxes, not incentives.

Gehrig is a Fargo city commissioner.

Related Topics: TONY GEHRIG
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