Isn’t it time to share the wealth?
Governor Burgum ran his first gubernatorial campaign stating he wanted to expand North Dakota’s economic base. In doing so he wanted to reduce our reliance on energy and agriculture by bringing other industries to our state. That was certainly a worthy and reasonable goal. Almost five years later that goal seems to have been abandoned even before the new governor was sworn into office.
Instead, the governor has made North Dakota government the richest per capita state government in the nation. Our state now has over 30 billion dollars in savings and investments (that’s about $40,000 for every man, woman, and child in our state). In fact, North Dakota, as a state, is putting away almost another billion dollars annually in additional cash and investments (that’s about $1,330 for every man, woman, and child).
These numbers are AFTER funding a $13,780,292,757 state biennium budget.
In addition to the billions and billions in North Dakota state cash and investments, our 53 counties have $859,064,869 in cash and investment and cities $1,234,671,520 (both numbers based on most recent State Auditor’s reports).
The above numbers don’t include the tens of millions that our public-school districts are sitting on in cash and investments, nor the funds held in the name of our public institutions of higher education.
With all this “public money” in cash and investments, on top of governmental sub-divisions’ annual budgets, it would seem tax relief for businesses and families should be a given.
Instead, the bite out of private business and family earnings grows each year. In fact, during the last Legislative session, not a single bill was introduced aimed at reducing state spending or providing any meaningful tax relief for private businesses and taxpayers.
Let’s get back to the discussion of diversifying our state’s economic base. North Dakota is a leading agricultural provider both to our 50-state country as well as a net exporter of agricultural products as well as oil, gas and electrical energy. North Dakota has a wealth of fresh water – both surface water as well as millions of acres of aquafers.
In addition, we are blessed with millions of acres of open spaces and four seasons. North Dakota is close to major metropolitan markets and our connection via rail and highways makes North Dakota an ideal location to import raw materials, transform them and export the finished goods for both domestic use and international trade. In short, North Dakota has the potential to become a major world manufacturing hub.
There are basically two ways to attract industry: either by offering incentives or removing disincentives.
The first, “offering incentives” most often occurs in the form of popular government “economic development” schemes generally called public/private partnerships. These have proven to fail in virtually every instance. In fact, public/private partnerships never work for the benefit of taxpayers. In North Dakota such partnerships give tax dollars to a special few. If the investments fail, the tax dollars are simply lost and the “private investor” participant usually walks away leaving the taxpayers to suffer the loss. If the “public/private partnership” succeeds, rarely are the invested tax dollars returned to the taxpayer investors.
Removal of “disincentives”, available to all equally, is the only legitimate and fair way to attract industrial sector investors. We should seek industry investors that shun participation in the growing popularity of “public/private partnerships”.
We need investors that will bring us solid, successful businesses and ones that do not wish to come seeking special hand-outs. Hand-outs such as special property tax abatement (Enterprise Zones) given at the expense of surrounding private property owners are unfair to all other property owners. Or other hand-outs such as those seeking the ever-popular tax increment financing (TIF) rip off, which is just another tax abatement scheme which lets the “insider businesses” have access to other people’s tax dollars.
The above “economic development” schemes, along with other equally failed schemes are virtually the only “economic development” we’ve seen the government sectors use in their effort to encourage economic development. These government trolled economic development schemes don’t work. The history, over the last thirty or more years, of these schemes proves they don’t work.
Removal of disincentives such as income taxes, property taxes and the nightmare of endless regulatory burdens imposed by government would be three of the quickest and most effective ways to ignite true and fair economic growth. The resulting fiscal outcome of attracting serious private investments will, in a relatively short term, generate revenues more than the taxes lost.
Minot’s governmental efforts at economic development provide a case study on what does not work. These efforts have been led by the City’s Magic Fund, funded with sales tax dollars, in conjunction with the Minot Area Development Corporation (MADC).
Over the last thirty years, tens of millions of taxpayer sales tax dollars have been spent in the name of economic development. This money has been given to dozens of private ventures. The majority, more than 85% – has produced no long-term growth, also known as economic development.
Councilman Tom Ross acknowledges that “investments” such as Renaissance Zones may not work. He notes these recipients just keep asking for more money. Then he notes, “A facelift program is giving money away when city departments have needs.” Yes, the government appears to have needs; so do taxpayers.
Right now, the Magic Fund is sitting on almost $9 million dollars. “We need to put those dollars to work,” says Councilman Paul Pitner. Possibly the best way to put that money to work is by giving it back to the taxpayers and reducing the local option sales tax. That is, leaving it in the pockets from whom it was taken.
Instead, spending proposals include such things as:
– $943,000 on downtown building façade improvement,
– $7,000 for conference registration and travel,
– Creating a permanent site for food trucks,
– $50,000 for a retail leakage analysis using cell phone, credit card and tourism data.
The sad truth is, Minot has focused on growing larger government, taking properties off the tax rolls, seeking and increasing subsidized housing while ignoring the hundreds of thousands of square of feet of vacant buildings coming to the downtown core.
When business and industry look at the spending history of Minot, they look the other way. No legitimate business or industry will willingly pick a place that sees government growth as a beacon for locating.
Sadly, most of the cities in North Dakota operate much like Minot. The state of North Dakota is a giant diamond in the rough, a one-ton gold nugget that has endless potential. All that is needed is a vision without blinders, an end to backroom dealing, smaller government, much less regulation and lower taxes.
North Dakota is in a unique position to remove disincentives, not just for attracting new industries, but for all North Dakota taxpayers.
North Dakota is the only state in the nation that can abolish both property taxes and income taxes for EVERYONE and still have more than enough money to fund government services. Doing this will put those tax dollars back in the pocketbooks of those that have earned the money and back into the local economy.
Abolition of the individual and corporate income tax is a good first step. The same for the most unfair and insidious tax ever imposed – property taxes. Removal of the web of government imposed compliance mandates can and should be reviewed and those that cannot be shown to provide more benefit than detriment should be relegated to the trash can.
Manufacturing industry would be attracted to our state due to its bountiful natural resources. Further, our state is centrally located with easy access to markets. This access works two ways. Both in bringing in raw materials and exporting finished products.
If all property were free of property taxes, those dollars put back in the hands of those who earned that money would directly infuse several billion dollars back into the private economy. Likewise, the same by abolishing the income tax. The abolition of both taxes would save the state tens of millions annually in the cost of administering and collection of those taxes – a bonus to taxpayers while further reducing the size of state government.
Manufacturing industry invests literally hundreds of millions in basic infrastructure annually. Abolishing property taxes allows those dollars to grow and improve the businesses that generate those dollars. Abolishing property taxes removes a major disincentive and provides a major incentive to attract industry to North Dakota and costs taxpayers nothing.
Abolition of property taxes makes owning and maintain a home less of a burden to all citizens. Without property taxes, North Dakota would be the only state in the Union where citizens could actually own and have security in their home. No longer would anyone living in North Dakota have to pay “rent” to the government to reside in their own home once paid for.
So, the question is: where does the money come from to pay for government? The fairest and least costly source of revenue to fund the necessary general government services is the sales tax. Funding our roads is taken care of with a user fee – often called the gas tax. The state could save half a billion dollars a biennium by not subsidizing non-resident college students. North Dakota taxpayers pay more to subsidize non-resident college students than any state in the nation. Why? Because the education lobby in this state sees taxpayer funded higher education, high professor salaries and never ending campus building projects as economic development. It isn’t.
Of course, North Dakota collects billions annually from its oil and gas revenues.
It’s time that a serious effort is undertaken to bring our state welfare expenditures under control. The 2021-23 total state biennium budget (which includes federal funds) is $16,936,345,565; 28.17% of that or $4,771,142,514 goes to the welfare system. This does not include medical subsidies or job programs.
The general fund budget (which does not include federal funds) is $4,992,957,330; 33% of that or $1,648,806,937 goes to welfare.
It’s time North Dakota citizens consider directing our elected officials to use our wealth of natural resources and our billions of cash and investments in North Dakota, and not in risky Wall Street securities. For example, the School Lands Trust alone has almost $6 billion invested in Wall Street securities. We are paying almost $25 million annually in management fees for this fund alone. Those millions would be better used to fund needed K-12 school infrastructure.
It’s time all levels of government stop using tax dollars from families to subsidize special public/private partnerships. These “partnerships” are nothing more than legalized theft; taxing everyone and giving those dollars to a special few. For this we need to “thank” the army of lobbyists that work our state legislature and state agencies year around. While the majority of North Dakotans go to work every day to support their families and pay taxes, the lobbyists go to work to divert the tax dollars into contracts and special legislation benefitting a special few.
It is critical that hard working North Dakotans understand that only the private sector creates wealth – not government and not lobbyists.
The North Dakota government is socking away billions in cash and investment savings accounts. Working families and businesses are struggling to make ends meet after paying endless taxes. Taxes are the single biggest expense of most family budgets. After paying living expenses and taxes, very little is left for saving.
Isn’t it time the wealth of North Dakota is shared with the taxpayers who create the wealth?