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Published December 17 2011

Diversion Discussion: Local governments fear loss of tax revenue

FARGO - Taxes are a dreaded but necessary inevitability used to pay for public resources such as education and roads.

But what happens when there are fewer people paying taxes and local governments have less money to provide basic needs?

That’s the situation facing several township and school district officials because of the proposed Red River diversion project.

Aside from the anticipated consequences looming south of Fargo-Moorhead, government bodies there also fear an exodus of residents and businesses that will leave subsequent problems.

Such a migration would shrink the tax base and potentially decimate the revenues townships and school boards rely on.

Take the Kindred School District, for example, which is one of many rural government bodies opposed to the project.

The district’s students hail from rural communities like Davenport, Hickson, the Bakke Addition, Kindred, Leonard, Oxbow and Walcott.

Those towns all lie in an area designated by the Army Corps of Engineers to hold back excess water during times of severe flood once the diversion is operational.

Kindred School District officials expect buyouts in those rural communities, which sparks fear that the diversion’s impacts could reduce the district’s taxable valuation by 25 percent, or more than $3.5 million.

This threat also comes after the district approved construction in 2010 of a new $14.7 million school that’s to be paid for, in part, by tax dollars.

The district, represented by Bismarck attorneys, submitted a seven-page letter to the corps last summer detailing its objections to the diversion.

“If this plan is adopted, (the district) will suffer extreme and long-term hardships,” the letter reads. “The district will have little choice but to potentially default on its obligations.”

Meanwhile, rural community leaders from areas such as Pleasant Township and parts of Richland County also fear a diminished tax base because of the diversion’s upstream effects.

The topic arose again at the recent fall meeting of Cass County township officers, who questioned diversion officials about how they might be compensated for the loss in tax dollars.

The solution hasn’t yet been determined, but Diversion Authority officials said there is smaller-scale precedent for what could be done to remedy concerns.

When the Maple River Dam was constructed a few years ago, the 60,000-acre-foot dam and reservoir north of Lisbon required local officials to purchase 2,500 acres of land and obtain easements to access 2,800 acres.

But the land used for the project was never taken off the township books.

Instead, the Maple River Water Resource District picked up the tab and continues to pay the tax bills every year, said Rodger Olson, a member of the Diversion Authority, who also leads the water resource board.

The tax dollars are part of ongoing mitigation costs related to the project, Olson said.

Olson and other diversion officials cautioned there’s no guarantee the same approach would be taken with the Red River project.

The diversion has a much more expansive footprint on the valley landscape, which could make the solution more complicated.

Such discussions will need to take place in the future to resolve rural communities’ concerns, Olson said.

The Diversion Authority is charged with handling all mitigation for the project.


Join the “Diversion Discussion” at www.diversiondiscussion.areavoices.com.

Have a question about the proposed Red River diversion, or want to recommend a topic you’d like to see addressed in an upcoming column?

Email Forum reporter Kristen Daum at kdaum@forumcomm.com (Subject: Diversion Discussion) or write to Kristen Daum c/o The Forum, PO Box 2020, Fargo, ND 58107.

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