What Projects are Being Proposed? A list of eight projects was developed by the City’s Infrastructure Task Force after gathering information from other community members.
What Will These Projects Cost? According to construction estimates from the City of Bismarck, the eight projects eligible for funding from this half-cent sales tax will cost approximately $217 million.
Can’t Federal Funds Pay for These Projects? Approximately $4.5M in federal funds are allocated annually to the Bismarck-Mandan Metropolitan Planning Organization (MPO) which is then used for projects in Bismarck, Mandan, Lincoln, Burleigh County and Morton County. Whereas in the past, Bismarck alone received approximately $2 million alone, annually, and then saved those funds until which time a project could be completed.
How Do We Pay for Roads Now? A combination of local and federal funds. Special assessments fund local and collector roads while sales tax revenue matches federally funded arterial roadways.
What is the Existing 1% Sales Tax Used For? Currently, the City’s existing 1% sales tax is used to buy down 25 mills of property taxes (voter-mandated), pay for snow gates (voter-mandated) and subsidize special assessments (discretionary)
Can We Fund Roads Another Way? While there are other ways to fund infrastructure, The City’s Infrastructure Task Force did identify an additional half-cent sales tax as the most efficient and tolerable method. Other funding methods reviewed by the Infrastructure Task Force included the implementation of a local gas tax, increasing lot fees and raising utility fees.
Below is information on what would be required of those alternative infrastructure funding methods In order to generate $17 million, or slightly more than a year’s worth of sales tax revenue, to fund construction and reconstruction of major arterial roadways.
Funding methods that are not available for use in infrastructure funding, per the North Dakota Century Code, include: local gas tax, use of a utility fee and a local vehicle registration fee.
If it’s Approved, Will We Be Able to Pay for All These Projects? No. The revenue raised by the half-cent sales tax during that 10-year period could only be used for the projects listed. Those projects are estimated to cost approximately $210 million while the half-cent sales tax is expected to only raise approximately $77 million. That revenue would be leveraged against any other funds received to complete as many projects as possible in 10 years.
What Happens if We Find Other Funds and are Able to Complete All These Projects in Less than 10 Years? The sales tax will end after 10 years or once the project list is complete, whatever comes first.
What is a Mill? A mill levy is a property tax that is based on the assessed value of a property. The rate of this tax is expressed in mills and is determined by dividing the funds needed for the city budget by total property valuation.
What is the Property Tax Buy Down? In 1986, Bismarck voters approved utilizing sales tax revenue to subsidize, or buy down, the equivalent of 20 mills of property taxes. In 1992, voters approved increasing the amount to 25 mills. That means that sales tax revenue is used to offset the equivalent of 25 mills of property tax revenue within the City’s budget.
If the Buydown Continues: The increasing amount of sales tax revenue dedicated to the property tax buydown leaves less available for voter-mandated snowgates and discretionary uses, primarily special assessment subsidies on street maintenance projects
So Why is a Cap Being Proposed? The value of 25 mills has grown faster than overall sales tax revenue and now consumes more than 60% of all sales tax revenue generated in Bismarck.
What Will this Cost Me? The graphic below provides an example of the financial impact of the 25-mill property tax buydown to a home with a market value of $200,000 with an assessed value of $100,000. As you’ll see, the estimated value difference of the cap in 2020 vs 2019 on a residential property valued at $200,000 is $7.25.
What Happens if We Don’t Cap the Buydown? An increasing amount of sales tax revenue dedicated to the property tax buydown leaves less available for voter-mandated snowgates and discretionary uses, primarily special assessment subsidies.
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