March 15, 2016

Feeling the pinch of fewer city sales tax dollars

By Neal A. Shipman
Farmer Editor

For the past two years, as Watford City’s city sales tax revenues have grown exponentially from $2.3 million in 2013 to more than $5 million in 2015, the city’s Roughrider Fund has been able to fund virtually every application that came before the committee.
And that dramatic increase in revenues couldn’t have come at a more opportune time for Watford City as the city undertook the construction of the new Event Center and the McKenzie County Healthcare Systems, Inc. began plans to construct a new healthcare facility. Both of those facilities were the two biggest recipients of Roughrider Funds in the fund’s history. The fund has committed $189,000 a month toward the construction and operational cost of the new Event Center, which is scheduled to open this fall, and another $108,000 a month toward the construction of the new replacement facility for the McKenzie County Healthcare Systems, Inc.
With the fund’s monthly take from the 1½ percent city sales tax, which was passed by Watford City voters in June of 2014, ranging from a low of $305,435 to a high of $851,049 in 2015, the $309,000 commitment to these two community facilities didn’t seriously impact the Roughrider Fund.
But now with city sales tax receipts tumbling from the slumping oil activity, the Roughrider Fund is now facing a much different financial picture.
During the first two months of 2016, the Roughrider Fund has collected just over $470,000 from its city sales tax, compared to just under $1.3 million during the first two months of 2015.
And that drop in revenue has led the Roughrider Fund Committee to decide that it cannot fund any new projects until it can get a better handle on how much revenue the fund will be receiving in the next few months.
“When push comes to shove, what the Roughrider Fund is going through is the same problem every government agency in North Dakota is going through,” states Jeff Ruggles, Roughrider Fund Committee member. “We’re trying to figure out how to manage our funds and where we can go forward.”
While Ruggles says that with a $3.2 million fund balance, the Roughrider Fund is hardly broke, with the $309,000 that has been committed monthly toward the Event Center and the new healthcare system, the fund could very well deficit-spend until city sales tax revenues rebound.
Which is why the Roughrider Fund Committee recently decided to table a $2 million request to help with the Watford City Golf Course expansion project, as well as a $250,000 request to help fund the city park district’s new nature park and $500,00 to help build a new terminal building at the Watford City Airport.
“We simply can’t fund projects like we used to,” states Ruggles. “We have to slow down and be able to predict what we are going to have in city sales tax collections.”
And Brent Sanford, Watford City mayor, couldn’t agree more with the Roughrider Fund Committee’s decision to stop funding projects until the revenue stream improves.
“We can’t fund new projects when funding is going down,” states Sanford. “We’ve got to be careful. We have two months of collection information and we don’t know when the tax revenues will go back up.”
Which is why Sanford says it is important that the Roughrider Fund not dip into its reserves to fund new projects right now.
“We need those reserves to make sure that the city can do the projects (the Event Center and the new replacement healthcare facility) that we’ve committed to,” states Sanford.
But like the Roughrider Fund Committee, Sanford isn’t optimistic  about the city’s sales tax rebounding in 2016.
“We know that 2016 is not going to be like 2015 when it comes to how much in funds the Roughrider Fund takes in,” states Sanford. “But I’m fairly confident that by 2017 we will be back at the 2015 level, and then the fund will continue to grow as the city grows.”