I have been promising to address this topic for over a week, and the time has now come for me to start. Yesterday I received the numbers which I need to begin my assessment of why prices are different in Grand Rapids than in some of the surrounding areas.
Before I get into the numbers, I would like to express my disappointment in some of our elected officials who have been asked about this same subject, but have failed to provide an answer, other than the standard,”I’ll look in to it.” They have almost instant access to the same information which I have in front of me now, and which took us much more time and effort to acquire than it would have for our elected officials had they requested it.
Now for the numbers. I’ll be comparing a Holiday gas station in Duluth with a local gas station. Many thanks, by the way, to the owner of the local station who volunteered his tax information for our use.
The Duluth station was valued at $388,000 in 2013, and was charged $13,110.72 in property taxes, which was at a rate of 3.379%.
The local operation, with $345,300 in value, was charged $14,274. That was a rate of 4.134%. Our local gas stations are being charged a property tax rate which is 22.34% higher than Duluth. No wonder our officials didn’t care to look too deeply into this subject.
Had the local station been charged the same rate as the Duluth station, the local station would have been charged only $11,667.69, or $2606.31 less. In other words, our local government took $2606.31 from this one station than they would have had they charged property tax at the same rate as Duluth. Based on this, doesn’t it seem as if they could legitimately charge us even more to offset this tax rate, rather than absorbing some of the extra taxes themselves?
Comparing the prices in Hibbing gives us even more dramatic numbers. Remember the article in which we showed that Hibbing spent 86.6% less than Grand Rapids? (http://grandrapidsvoice.com/2014/01/01/spending-comparison-between-hibbing-and-grand-rapids/) In that same article we can easily see that Grand Rapids charged 45.7% more in property taxes than Hibbing. That’s almost exactly twice the difference between Grand Rapids and Duluth.
Wait a minute. The property taxes are 22.34% higher in Grand Rapids than Duluth, and the prices in Grand Rapids are 5 to 10 cents higher at pump. The property taxes are 45.7% higher in Grand Rapids than in Hibbing, and the Grand Rapids pump prices are usually between 15 and 20 cents higher.
The difference in tax rates between these cities is 22.34% in one case, and 45.7% in the other. Double.
The difference in gas prices is 5-10 cents on one hand and 15-20 cents on the other. About double.
Coincidence? I don’t think so. The relationship between the tax rates and the prices are too similar to be brushed off that easily, and the failure of our elected officials to answer our many queries as to why the prices are different only reinforce our hypothesis.
Maybe instead of complaining to our station owners locally, we should thank them for absorbing a part of these extra taxes themselves when they could easily charge us even more and feel perfectly justified.
Instead, lets start asking our elected officials not why the prices are higher, but why these officials created the situation where they had to be.