On June 12, Watford City voters will have an opportunity to remove the current $25 cap on sales tax within the city. A citywide sales tax of one cent was first passed by Watford City in 1998, called the Roughrider Fund, when it took in approximately $100,000. In 2014, voters decided to raise the tax to 1.5 cents, but retain a $25 cap on sales tax. Today, the fund has grown to more than two million dollars in annual revenue. Those funds have typically been used for infrastructure and recreational projects. Most recently, the fund helped build the McKenzie County Healthcare Systems hospital and adjoining clinic, as well as the McKenzie County Multipurpose Building, and the McKenzie County Veterans Memorial Building. However, now voters will be asked to remove the $25 sales tax cap, which allows companies to ask for refunds for sales tax amounts over $25 they have paid to retailers, which leaves Watford City paying sizable refunds.
Watford City residents in favor of removing the tax cap measure claim that they need the cap removed in order to stabilize funding for committed projects, which include 1.5 million designated to building the Roughrider Center and an addition 1 million for the hospital. Additional funds would be used for added projects.
Many argue that repealing the tax cap wouldn't matter to average or ordinary residents of Watford City, who typically do not spend more than $1,600 on a single purchase, which currently triggers the $25 tax cap. This would affect primarily businesses that might spend larger dollars on single purchases, so their argument goes.
Jessie Scofield, who is working to remove the tax cap, told The Roundup, "There have been a few questions regarding how this change will affect home purchases. There is no sales tax on land or home purchase. A house is considered a fixture on the land, so there is no sales tax on that either. If you build a home, you will pay sales tax on those materials used in the construction."
According to Watford City Pennies Add Up, a Facebook Group set up to lobby the public for the change, it's not just a matter of lower revenue, but more unpredictable revenue. The page states, "City sales tax refund requests from city limit purchases by big industry and construction companies have resulted in unpredictable numbers for a revenue stream the city relies on to make important payments. Because of the state reporting system, the city does not know in advance when a person or company has filed for city sales tax reimbursement, making budget planning difficult."
The ballot measure, called Watford City Measure No. 1, reads, "Shall the City of Watford City amend its Home Rule Charter to remove the existing $25 maximum tax on any single purchase or sales transaction?" A "yes vote" means that one is voting to remove the tax cap, and a "no vote" means that one is voting to keep the tax cap.
The aforementioned Home Rule Charter mentioned in the measure is a reference to the 1998 sales tax limit, which opponents argue hasn't kept up with inflation, is outdated, and provides unsteady and unpredictable revenue for the city.
June 12 is the day slated to vote on the ballot initiative.
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