City Finance Squeezed: Bismarck Eyes Tough Revenue Choices

Facing tighter state and federal dollars, Bismarck’s finance team warns of budget shortfalls — residents may see tax or service shifts soon.

By BismarckLocal Staff3 min read
A City Hall Meeting In Session, With Finance Charts Projected

In short

  • North Dakota is projected to lose $129 million in individual and corporate income tax collections over the 2025–27 cycle due to recent federal tax ...
  • That drop at the state level reduces grant potential and intergovernmental support, shifting more burden to cities like Bismarck.
  • The 2026 budget shows $72.2M in general fund revenue, yet $79.8M in planned general fund spending — leaving a multimillion-dollar shortfall.

As federal tax reforms and state income declines squeeze coffers across North Dakota, Bismarck’s city finance officials warn they’re under increasing pressure to close budget gaps — a task that may force changes to taxes, service levels, or capital priorities.

North Dakota is projected to lose $129 million in individual and corporate income tax collections over the 2025–27 cycle due to recent federal tax changes.

That drop at the state level reduces grant potential and intergovernmental support, shifting more burden to cities like Bismarck.

The 2026 budget shows $72.2M in general fund revenue, yet $79.8M in planned general fund spending — leaving a multimillion-dollar shortfall.

Under North Dakota’s House Bill 1176, cities are limited to 3% growth in property tax revenue year over year — restricting how much Bismarck can raise revenue from local property taxes.

Costs rising, revenues constrained, and local options shrinking. Bismarck’s finance leaders say the city is at a pivot point.

I reached out to Dmitriy Chernyak, Bismarck’s Finance Director, and Commissioner Anne Cleary, chair of the budget committee, for insight.

Commissioner Cleary acknowledged tough conversations ahead:

“We passed large projects like a new police station and water plant — but we can’t keep adding without offsetting cuts or revenue. The cap forces us to be more surgical this cycle.”

The 2026 budget allocates money to an $80 million police station (via a half-cent sales tax), water treatment expansions, and airport improvements. City worker salaries, benefits, and expansion of staff are projected at $85 million — a heavy load compared to constrained general revenue. For years, Bismarck has tapped reserves to plug gaps. But reserves are finite — and with ongoing deficits, that strategy isn’t sustainable.

The 3% limit restricts how much Bismarck can raise property taxes annually. Voters approved a half-cent sales tax earmarked for infrastructure and public safety — increasingly the only “new revenue” lever for big projects. The city is considering adjustments to water, sewer, and other utility fees to recoup costs. In past budgets, they’ve even reduced base charges courtesy of state grants.

Some city services may see belt-tightening: delayed maintenance, reduced expansions, slower staff increases.Utility bills and fees could rise modestly to cover operational shortfalls. Debate over future tax or bond measures may intensify — residents should expect more outreach and public hearings. Expect tough tradeoffs: “nice to have” projects may be deferred in favor of core services like public safety and infrastructure.

Bismarck stands at a fiscal crossroads. External shifts in tax policy and internal constraints collide, putting city officials under pressure to make difficult tradeoffs. The path forward will likely include a mix of fee increases, leaner service plans, and carefully chosen investments. For locals, this is more than budget talk — it’s about the quality of roads you drive, water you use, safety you expect, and what your wallet will absorb.

Frequently asked questions

What is causing Bismarck's budget shortfall?

Bismarck's budget shortfall is primarily due to decreased state income tax collections, estimated at $129 million over the 2025–27 cycle, as a result of federal tax reforms. This reduction limits the city’s revenue from grants and intergovernmental support, increasing the financial pressure on local budgets.

How will the budget shortfall affect Bismarck residents?

Residents may experience changes in local taxes, utility fees, and city services as Bismarck considers adjustments to cover the budget shortfall. Possible outcomes include fee increases for water and sewer services and potential delays in maintenance and project expansions.

What restrictions does Bismarck face in raising property taxes?

Under North Dakota's House Bill 1176, Bismarck is limited to a 3% annual growth in property tax revenue. This cap restricts the city's ability to raise necessary funds to meet increasing service demands and operational costs.

What new revenue measures is Bismarck considering?

Bismarck is exploring adjustments to utility fees to recover operational costs and has previously implemented a half-cent sales tax designated for infrastructure and public safety projects. These measures are crucial for funding essential services amid budget constraints.

What are the potential impacts on city services in Bismarck?

Bismarck may experience reduced levels of service, with possible delays in maintenance and project expansions. The city’s finance officials emphasize the need for careful prioritization, potentially deferring 'nice to have' projects in favor of maintaining core services like public safety and infrastructure.

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