GRAND FORKS — Grand Forks’ sales tax haul came in at a record high in February, with $3.32 million in collections — edging above another big month in December, which netted $3.06 million.
Those figures are sunny on the surface, and appear to show a city emerging from the pandemic in a strong position. But they also come as the nation deals with record high inflation. This week the U.S. Bureau of Labor Statistics announced a 7.9% inflation rate over the last 12 months, marking a four-decade high for the statistic. That casts doubt on the strength of local spending as Grand Forks seeks new, post-pandemic direction.
City Administrator Todd Feland argued that the high numbers are the result of a strong economic bounceback, though he acknowledged that inflation might play a role. In early 2020, he said, the future was largely clouded for the city — but in recent months, he said “we really picked up our momentum.”
“I think it’s really a positive,” he said.
But UND economist David Flynn offered a less rosy look at recent data. Controlling for inflation, he said, recent sales tax figures are below early 2020 levels. And the consumer price index, he said, has risen 10% during the last two years.
“It’s still a little bit early. We’re still dealing with a lot of pandemic adjustment,” he said. “It’s the kind of thing that you do have concerns about in terms of the health of various sectors — particularly some of the retail. (Consumers) may be adjusting spending patterns because of increased prices, and that’s going to lead to even more adjustment.”
Maureen Storstad, Grand Forks’ finance director, said she does not have data that explains the fine details of the tax revenue’s source — but said a “significant portion” was likely funded by online sales taxes, which recently began collection in North Dakota.
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Delivery of the sales tax arrives on a brief, roughly two-month delay. That means the February sales tax distributions from the state that are received now were likely collected during December, roughly overlapping with the holiday shopping season.
Storstad noted that the portion of the sales tax collected on a special restaurant and lodging portion of local taxes sat at $58,000 — an indication that people are “out and about.”
