22-02-2025
2024 a good year for Grand Forks' sales tax collections -- and the community's hospitality industry
Feb. 22—GRAND FORKS — Last year saw strong sales and lodging tax collections in Grand Forks as the hospitality industry continues to recover from the COVID-19 pandemic.
Collections in Grand Forks were up 9% in 2024, much higher than the city's budgeted 3% growth. Mayor Brandon Bochenski said the strong collection reports show the city has moved beyond pandemic recovery and into growth.
"I don't think of it as much of a rebound as much as it is just a positive outlook on the future. You're seeing both visitors that are coming to town and going to hotels and having the restaurants being used," Bochenski said. "The biggest thing is it's outpacing inflation."
The city collected approximately $2.9 million a month from the sales tax it levies on purchases, for a yearly total of $35.5 million. According to the U.S. Bureau of Labor Statistics, inflation was 3% throughout 2024. Sales tax collections do fluctuate a fair amount month to month and are affected by variables like inflation and how much people are spending.
Sales tax revenue goes toward various funds that pay for street and water projects, economic development and event center funding. For most taxable purchases, a consumer pays a 2.25% local sales tax along with the state's 5% rate. That tax is broken down three ways:
* 1% is a general sales tax that goes toward the city's general fund, infrastructure and economic development. This tax has been in effect since 1985.
* 0.5% is the street and water infrastructure portion that has been in place since 2018.
* 0.75% is an event center portion. The tax was originally implemented in 1996 to fund the Alerus Center construction and was amended by voters in 2023 to also pay for
the Altru Sports Complex and capital costs at the Alerus Center.
Additionally, on restaurant and lodging purchases, an additional 0.25% tax is paid, which also goes toward the Alerus Center. The collection for this tax was up 21% year-to-date, collecting a total of more than $800,000 or nearing an average of $69,000 a month.
"It was a good year. It was better than lots of other previous years," said Ashok "Smiley" Thakker, who owns the Ramada, Days Inn and Rodeway Inn in Grand Forks. "(The Zach Bryan Concert) was big and we need more events like that. It was amazing."
Bryan, a popular county music singer, performed on back-to-back nights in Grand Forks last summer. It was the Alerus Center's first doubleheader. The concert generated approximately $12 million in
economic activity, half of the Alerus Center's average economic impact in two days.
This year is looking to be the same if not better than 2024 according to both Thakker and Hal Gershman, president of Harry's Steakhouse.
"We had a great year," said Gershman. "We are very happy with it and we think (2025) will be better than 2024 the way she's gone so far."
Since
a hospitality downturn during the pandemic,
2024 has seen a continued and stabilizing rebound.
"We ended 2024 with occupancy rates ending almost the exact same as 2023 for most of the year," Visit Greater Grand Forks Executive Director Julie Rygg said. "All in all, we're ending the year pretty well."
Rygg said that 2023 was really a rebound and 2024 was a continuation of that with people "anxious to get back out and do things."
Lodging tax collections, from
a 3% tax the city levies on hotel and motel room rentals, were up 8.4%
in 2024 over 2023 and up 147% since 2020, when the lodging tax hit a low due to the pandemic. The tax generated around $150,000 more than was budgeted. The City Council did have discussions about potentially not putting all the tax proceeds toward Visit Greater Grand Forks, as it typically does.
"I would like us to seriously consider using some of those funds to pay for capital improvement instead of only funding Visit Greater Grand Forks," council member Rebecca Osowski said during a Dec. 16, 2024, meeting.
The higher sales tax collections also mean the city has more money for street repair projects. According to City Engineer Al Grasser, since the tax was implemented, the city has been able to get more of the city's roads to good repair condition.
"Eight years of sales tax collections and you can see pretty dramatic change," Grasser told the council on Feb. 3. Most of the city's roads are in good condition and many fewer miles of roads need complete reconstruction with the sales tax allowing the city to undertake more of those projects.
