6 days Ago By Rob Port
MINOT — As the crossover break ends and lawmakers in Bismarck begin work on the second half of their session, we need to discuss two significant threats to meaningful property tax reform. Remember that lawmakers entered the crossover break with the House of Representatives having punted the property tax question to the Senate. They passed, by wide margins, three competing property tax proposals.
House Bill 1176, introduced by Rep. Mike Nathe and backed by Gov. Kelly Armstrong, includes a $1,450 tax credit for every primary residence that is fueled by Legacy Fund earnings and would grow over time to obviate property tax burdens entirely for most homeowners.
That bill includes a 3% cap on local spending that can be rolled over for as many as five years (and set aside for four years at a time with approval from voters). House Bill 1168, from Rep. Scott Louser, buys down 16% of the schools’ portions of property tax bills.
It also includes a 3% cap on local spending (with school districts exempted) though Louser’s version could only be rolled over for one year at a time. Voters could still vote to set the cap aside for as many as five years at a time. House Bill 1575, from Speaker Robin Weisz, would reduce residential property taxes by 2.
75% and commercial property taxes (including agricultural land) by 1.75%. It also includes a 3% cap on local spending that could be exceeded with voters’ approval for as many as six years.
There are now three major property tax bills before the Senate and zero before the House. It’s up to the senators to send the House a package representing meaningful reform and relief. This brings us to the threats.
The first threat is a weak cap. Lawmakers have directed billions of dollars to local governments in vain attempts to buy relief for property owners. It hasn’t worked because local governments have gobbled up those dollars and continued to raise property taxes.
Any property tax bill emerging from this session that doesn’t include an ironclad cap on property tax bills will be more of the same. The lobbyists for local governments are working hard to weaken any potential cap. Thankfully, it seems Senate Majority Leader David Hogue understands this.
“If there are not caps, we will not have succeeded in passing some significant property tax reform,” he said during a recent episode of Plain Talk. The other threat is the fight over property tax relief for agricultural land. The property tax bills before the Senate focus on relief for primary residences, not revenue-producing properties like commercial spaces, rental housing, or farmland.
Primary residence property taxes are the chief pain point for North Dakota voters. Farmers, meanwhile, already have a farm residence exemption. If they live off the farm, they’re already in line for relief from something like the Nathe/Armstrong bill.
Rural-area lawmakers want more. They’re swinging a bigger stick with a new caucus featuring roughly 50 members, or enough to scuttle any property tax bill if they don’t get their way. But if the property tax relief passed by lawmakers is spread too thin, it may not prove potent enough to stave off future efforts to do something foolish with a ballot measure.
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