Bismarck-Mandan taxable sales and purchases continue to lag, but the third and fourth quarters could carry a significant bump from online sales.
Taxable sales and purchases for the second quarter of 2018 are up nearly 10 percent in North Dakota as a whole, led by some recovery in the oil field, but numbers in Bismarck-Mandan and Burleigh and Morton counties are down, similar to the first quarter.
Keith Hunke, city administrator for Bismarck, indicated that the city has limited use of its money for rehabbing facilities and is looking at special assessment subsidies with the aim of reducing its spending due to the decrease in sales tax revenues.
Taxable sales and purchases were down 2.8 percent in Bismarck, dropping from $426.5 million in the second quarter of 2017 to $414.5 million in the second quarter of 2018. Mandan’s were down 9 percent to $65.6 million.
Should those numbers be boosted in the fourth quarter, how that money is spent will be dependent on the margin of increase.
“I think that’s the real question right now,” Hunke said. “Any additional funding would be helpful.”
North Dakota Tax Commissioner Ryan Rauschenberger said he expects to have those numbers in February, following the first full quarter of collections. Rauschenberger estimated, based on a 2014 study by the National Conference of State Legislatures, that the state could see an additional $10 million in Fiscal Year 2020 and $15 million in Fiscal Year 2021.
As the result of a recent Supreme Court decision, South Dakota v. Wayfair Inc., companies with $100,000 worth of sales in the state or 200 or more transactions are required to collect taxes and remit them to the state in which the sales were made. The deadline for companies to start doing this is Oct. 1.
More than 600 retailers have registered for sales tax collections, according to Rauschenberger.
“In the last couple weeks, we’ve been seeing that rate of registration go up drastically,” he said, noting that 75 new companies have registered in the past week alone.
Rauschenberger expects that weekly number could make it to 100 new companies this week and more than 100 next week. Before that, there had been 500 total newly registered companies between June 21 and Sept. 10.
After Oct. 1, Rauschenberger said his office will peruse the list of top 1,000 internet sales companies to determine whether they are meeting the collections requirements.
“Some might not have the sales ... but a number of them clearly will,” he said.
Those that don’t meet the deadline will be assessed 1 percent monthly interest, said Rauschenberger, adding that the percentage is similar to the penalty for brick-and-mortar stores.
Some states pushed off enforcement until Jan. 1, but North Dakota joined several others with an Oct. 1 deadline in order to capture the holiday shopping season, according to Rauschenberger.
Hunke said, when Rauschenberger determines the new collections trend, city staff will begin making recommendations for that revenue’s use to the Bismarck City Commission. Because those numbers won’t come until February, they won’t likely be considered until the 2020 budget is drafted.
Bismarck’s taxable sales and purchases for the second quarter were the second highest in the state, behind Fargo’s $636.8 million. However, Williston almost caught the capital city with its $400.3 million, according to Rauschenberger.
Williston’s numbers fell above 2010 levels but below 2011 levels, when the oil boom started to take off.
Mining and oil extraction sector taxable sales and purchases increased by $208 million, or 43.31 percent, compared to the second quarter of 2017. And the wholesale trade sector increased by $236 million, a 22.23 percent increase.
“There was strong growth in both the mining and oil extraction sector and the wholesale trade sector, two sectors associated with the oil industry,” Rauschenberger said. “The retail trade sector, the sector often thought of as a measure of economic activity, saw a meager increase.”
Rauschenberger said this shift to growth in the west and stagnation in the east has been a new trend for the state over the past year.
“Usually the state moves together,” he said. “This is something we’re watching very closely that they’re not quite as tied to each other as they used to be … We’re changing the way we’re looking at the (revenue) forecast because of it.”