Grand Forks Mayor Brandon Bochenski is exploring tax adjustments to further alleviate property tax burdens for homeowners in the city. Following recent legislative changes in North Dakota that introduced a significant property tax credit, Bochenski’s proposals aim to enhance financial relief for residents.
In May, Governor Kelly Armstrong signed House Bill 1176, which established a primary residence tax credit of $1,600. This new credit represents an increase of $1,100 from previous amounts, enabling homeowners to offset their property taxes effectively. In conjunction with this initiative, Bochenski suggests that the city could implement minor increases to both the sales tax and franchise fees. The goal is to eliminate the city’s portion of property tax for primary residents.
Bochenski noted, “With the state stepping forward with that $1,600 tax credit, that sort of made it financially possible for the city to do this while still keeping our sales tax and franchise fees lower than our regional competitors.” Currently, Grand Forks levies a 2% franchise fee on local utility companies for the use of public rights-of-way. Bochenski proposes raising this fee to 3%, stating that it would primarily affect data centers, industrial users, and nonprofits that do not pay property tax.
The city’s current sales tax, when combined with the state tax, totals 7.25%. Bochenski’s recommendation includes raising this rate to 7.625%. He emphasized that even with these adjustments, Grand Forks would maintain lower sales tax and franchise fee rates compared to neighboring cities. For instance, East Grand Forks has a 4% franchise fee and an approximate 8.3% sales tax, while Grafton has an 8% sales tax, and Fargo charges 7.75%.
Changes to the franchise fee can be enacted more easily; however, any increase in sales tax will require a community vote. Bochenski stated, “And then it would probably be a secondary vote to change the home rule charter to allow us, essentially, to reduce primary residence on their houses to paying no property tax.”
The proposed sales tax increase could generate additional revenue, which currently accounts for approximately $7 million of the city’s $55 million budget. Bochenski acknowledged that this adjustment could introduce fluctuations in the budget. If the increases exceed what is needed for primary residence taxes, surplus funds might also be allocated toward non-primary residences and commercial properties.
Ultimately, Bochenski’s primary motivation for suggesting the elimination of city property taxes is to provide greater benefits to local homeowners. He believes this could encourage more individuals to purchase homes in Grand Forks, stating, “It sort of shifts the scale so you have less carrying costs versus an investor or a rental owner. They’d still be paying the same — it’s just you’d have the advantage of having less property tax burden.”
Should these measures take effect, Grand Forks aims to enhance its attractiveness to potential homeowners, fostering economic growth and community stability.
