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N.D. taxable sales leap

BISMARCK -- With a boost from oil field activity, North Dakotans shopped and spent at a phenomenal pace in April, May and June, sending taxable sales and purchases 21.4 percent higher compared to the same time last year.

It is the biggest jump in recent history, a state tax analyst said, and Tax Commissioner Cory Fong noted it was the 21st consecutive quarter in which the state's taxable sales and purchases rose compared to the same quarter of the previous year.

"This is a significant, significant increase," he said.

But Fong and legislative budget writers sounded a cautionary note Friday, saying the second half of the year might not be like the first.

The oil boom in the western part of the state drove some of the second quarter leap, Fong said, but noted business growth was widespread. Only four the state's 50 largest cities -- Cavalier, Larimore, Linton and Rolla -- did not have increases. He said that shows a strong, diverse economy statewide and consumer confidence despite gasoline prices that were spiking in those months.

Among the 50 largest cities, the Bakken oilfield bulls-eye of Stanley was No. 1, with 155 percent growth. It went from $3.7 million to $9.5 million in taxable sales and purchases.

Fong noted that the second quarter ended before the national financial industry crisis blew up, the stock market collapsed and the price of oil fell by more than half. Farm commodity prices have also gone down in recent months. Some or all of those factors could have driven down spending in the recently completed third quarter or into the current fourth quarter, he said, but neither will be analyzed until weeks or months from now.

"He's right to be cautious," said Rep. Blair Thoreson, R-Fargo, a member of the House Appropriations Committee. Though North Dakota's economic ups and downs usually lag national peaks and valleys, "The world economy could impact our state."

Sen. Rich Wardner, R-Dickinson, and a Senate Appropriations Committee member, agreed. Already, he said, at least one major Dickinson manufacturer, TMI Industries, has seen orders for its institutional cabinets from around the country slow. The plant is still humming along because of a large backlog of orders, he said. Other primary sector businesses in Dickinson that market nationwide are feeling or are going to be feeling the national recession, he said.

"I think our (state) economy is not going to be as strong as it was," he said. "It's not going to grow like that (21 percent).

There's no question the national recession is going to show up and affect North Dakota, said Sen. Larry Robinson, D-Valley City, also a member of Senate Appropriations. "It's a given we're going to have an impact. The question is when and to what extent," he said.

So far, sales tax collections July through October are very good, said Tax Department analyst Kathryn Strombeck, but much of the revenue merchants sent to the department during those months is from the same buying spurt already reflected in Friday's second quarter report.

In all, the Tax Department said second quarter taxable sales and purchases totaled $3.1 billion, compared with 2.5 billion in the same three months last year. The largest sector is retail, and it went up nearly 10 percent, from $1.02 billion to $1.125 billion. Mining and oil extraction is the fourth-largest sector. It had the biggest percentage jump in taxable spending -- 65 percent -- and totaled $158 million.

The five biggest cities' results, all increases, were: Fargo, 8.9 percent; Grand Forks, 8 percent; Bismarck, 8.5 percent; Minot, 18.2 percent, and Williston, 79.8 percent.

Other larger cities: West Fargo, 2.57 percent; Jamestown, 23 percent, and Dickinson, 29 percent.

Three of North Dakota's largest cities had construction booms that led their commercial sectors: Jamestown, up 114 percent; Williston, up 159 percent, and Dickinson, 48 percent, slightly below its 59 percent hike in manufacturing sales.

In Grand Forks, the top sector was a 51 percent jump in "arts, entertainment and recreation." The second quarter includes the days the Alerus Center hosted the state Democratic-NPL convention and tens of thousands of visitors who came to hear President-elect Barack Obama and Sen. Hillary Clinton. The arts/entertainment sector includes establishments involved in "producing... events for public viewing" but confidentiality laws bar the Tax Department from pinpointing the Alerus Center or any other business. A separate sector for accommodations and food service went up 11.7 percent in Grand Forks that quarter.

In Fargo, the financial and real estate sector led the increased business in the second quarter, rising 26 percent. In West Fargo, accommodations and food service had the most growth, 29 percent.

Three rural oil boom counties registered triple-digit increases: Burke, up 286 percent; Mountrail 117.5 percent and Renville, 121 percent. Williams County, the center of the North Dakota oil patch for 57 years, had an 82.6 percent increase buying, but that was less than Walsh County in the Red River Valley, with 89 percent.

Cole works for Forum Communications Co., which owns The Jamestown Sun