BISMARCK, N.D. (AP) – North Dakota voters this fall could eliminate a large portion of property taxes by approving a ballot measure that would make significant cuts to a variety of state services. Supporters say it provides the relief the state has long sought.
If passed, the constitutional initiative would eliminate assessed value-based property taxes and require the Republican-controlled Legislature to replace lost revenue. A top Congressional committee estimated the total cost would be $3.15 billion every two years. This is a huge number for a state that passed a two-year general fund budget of $6.1 billion in 2023.
Opponents wonder what government services and initiatives would be cut to supplement the replacement income.
“That would completely disrupt the Legislature and the appropriations process, something we’ve never seen before,” said Mike Nete, a longtime state representative and a Republican on the House Appropriations Committee. ” he said. As for how to do this, that’s for sure. ”
Medicaid expansion and funding for hospitals, nursing homes and education programs could all be stretched thin, he said. House Appropriations Committee Chairman Don Vigesser, a Republican, said funding for infrastructure projects would also be at risk. He said Congress may also have to cut state agency budgets and staff.
Rick Becker, the task force leader, countered that it’s not realistic to pinpoint where the plan would be funded, but that the state has plenty of money to fill the gap. He said the state Legislature could earmark the proceeds from the state’s $11 billion in oil tax savings and millions more that he called “corporate welfare” for private companies and special interests. . The state is also receiving more revenue than expected.
“We are a wealthy state per capita, so we can actually make this transition and have the economic wherewithal to do so without raising taxes or cutting services,” said Becker, a former Republican state representative.
More than 100 organizations, including agriculture, energy, education, health care and other groups, have formed the Keep It Local coalition to oppose the measure. Chairman Chad Orban said the effort puts a sledgehammer to an issue that deserves a more thoughtful approach.
A similar bill failed in 2012. Orban said he expects the vote gap to narrow further due to growing discontent and political change in North Dakota since 2012, but added that he is confident voters will defeat the measure.
The measure would set replacement revenue from the state at the amount of property taxes due in 2024, but Orban said tax revenue would need to increase in the coming years.
To address this, Becker said the measure would only eliminate assessed value taxes on properties, allowing local governments to tax them in other ways. Becker suggested cities could enact infrastructure maintenance fees based in part on road frontage, giving local governments a way to raise more revenue than the state could replace.
Orban said Congress could raise income and sales taxes, devise new or previously unconsidered fees or allow local governments to tax differently. . Raising the sales tax may help big cities like Bismarck and Fargo, but it won’t work in the future in rural areas that don’t have a sales tax base to pay for schools and police, he said.
Mayor Tim Mahoney said property taxes account for about $45 million, or one-third of Fargo’s budget, and about 40 percent of the budget goes to police and fire. North Dakota’s largest city has about 200 police officers and 150 firefighters and needs to offer competitive pay to retain employees and attract new hires, he said. said.
“In order to remain competitive, whether it’s living costs or something that happens every year, if you have a certain amount of money coming in, you have to make it up somewhere, and that’s not a simple solution. No,” Mahoney said. .
Last year, Congress passed a package of income tax cuts and property tax credits worth an estimated $515 million. The state’s fiscal situation is strong, with oil and sales tax revenues also strong.
If passed, most of the bill would go into effect on January 1, 2025.
