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Cass County sales tax shrinks while state sees growth

FARGO — Cass County's retail economy appears to have slowed down in 2017, the third year that's happened, despite the turnaround the state as a whole saw last year, according to data the state tax commissioner released Wednesday, March 28.

Total taxable sales and purchases in the county totaled $2.9 billion, which is 4 percent less than in 2016. Since peaking in 2014, the county has seen a decrease of 11.7 percent as the state's oil economy went south.

"Why we're in a slump, I can't really tell you. There's probably a lot of different factors that go into that," said County Auditor Mike Montplaisir.

Those factors could include online retailers taking business from brick-and-mortar retailers, low commodity prices affecting the income of area farmers and a decrease in Canadian visitors, he said.

Fargo and West Fargo, the county's retail hubs, also saw their slumps continue in 2017 with taxable sales and purchases decreasing by 5 percent and 1 percent, respectively.

The state as a whole, however, has seen retail growth, which Tax Commissioner Ryan Rauschenberger attributed to the revival of the oil industry. In 2017, the state reported total taxable sales and purchases of $17.9 billion, an increase of 3 percent. This is still 37 percent lower than in 2014.

Montplaisir said Cass County did benefit to some extent from the oil boom, which came so hard and fast that retailers in the Oil Patch couldn't keep up. He said county residents who went to work out west would've stocked up when they had a chance to go home.

The oil boom began in 2010. The following year, Cass County taxable sales and purchases increased 10 percent, much higher than the 4 percent average growth the county had seen in the previous 10 years.

Though higher oil prices means North Dakota is pumping more oil, Montplaisir said he expects more "orderly growth" this time.

Cass County isn't alone in its retail slump. Of the state's 53 counties, 24 reported lower taxable sales and purchases in 2017. That includes all four of the most populous counties. Burleigh County was down 4 percent, Grand Forks down 2 percent and Ward, an oil-producing county, down 2 percent.

In contrast, taxable sales and purchases in all oil-producing counties was up 13 percent, mainly because 2016 was the worst year they've had since the end of the oil boom.

In Cass County, Montplaisir said farmers' income have been relatively low in the past few years, so they're not spending as much on equipment.

Internet retailers that don't pay sales taxes have also made a difference in taxable sales and purchases, he said. He didn't blame Amazon, which now pays sales taxes in all states, though many online retailers that market through Amazon don't pay.

For the county, one consequence of the lower sales tax revenue is funding for the massive Fargo-Moorhead flood diversion, now estimated to cost $2.4 billion. A significant chunk of county and Fargo city taxes go toward the project.

Montplaisir said the financial model in use now assumes 3 percent growth a year, which obviously isn't happening. The Diversion Authority, which includes the county, would have to do some new calculations, he said.

Asked if he had any sense when the slump would end, he said, "We'd all like to know that."

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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