Proposed Reforms To Property Taxes Look Pretty Good


Next year will bring with it another session of the North Dakota Legislature, and another debate over property tax reform.

Governor Jack Dalrymple has created a property tax task force (to the chagrin of some in the Legislature who feel it is duplicative of their own work) and it seems they’re getting close to solidifying some specific reforms according to this report from Mike Nowatzki.

I would prefer getting rid of the property tax. I think it’s an archaic, cumbersome, and hugely inefficient way to collect revenue. As a state, I think we have the know-how and the fiscal position to find a better way. But if we’re going to keep the property tax – and that’s what voters cast their ballots for overwhelmingly in June of 2012 – these reforms don’t sound so bad.

Here’s what is being considered, and it’s mostly consolidation and caps. Stuff the Legislature really should have taken up before spending hundreds of millions on property tax buy downs in the name of “relief” over the last few bienniums.

If we’re going to have a property tax, maybe a better solution for the Legislature would have been to restructure how that tax works, instead of just raining money down on the local governments.

  • For counties, consolidating 17 levies for specific purposes (excluding some for things like historical societies and extension services) into a general fund levy. Four levies would be consolidated into a road and bridges levy, and five levies into a single building project levy. The cap on general fund levies would drop from 93 mills to 60 (just four counties had a levy above 60 mills in 2012).
  • For cities, “20 levies for specific uses such as ambulance services, forestry and weed control would be consolidated under a general fund levy, and seven levies would be rolled into a single capital improvements levy,” reports Nowatzki. The cap on that levy would be lowered from 136.87 to 105, a level exceeded by 28 cities in 2012.
  • There would be a cap on voter-approved mill levy increases.
  • Cites and counties would have four years to come into compliance, but there is an exemption for cities that have or approve home rule charters allowing them to set the caps aside. Some 132 cities in North Dakota have home rule charters, though “they don’t always address levy limits” reports Nowatzki.

Cutting down on the number of specific use levies, and putting more dollars into general funds, makes sense. Why on earth would you want your city or county to raise your property taxes for, say, ambulance services when there are unused property tax revenues from some other mill levy that could be used? Putting the money in fewer buckets, with fewer restrictions, means more efficient allocations of tax dollars.

That’s a good thing.

What worries me is the cities/counties getting too much leeway to work around these reforms. We’ve seen how local entities will pound voters with one ballot question after another on issues like bonding and home rule charter, making it questionable just how much restraint these reforms will represent long-term.

And then there’s this passage from Nowtazki, attributed to North Dakota Association of Counties lobbyist Mark Johnson: “Johnson said he’s nervous that smaller jurisdictions with less economic development and voters who are more reluctant to impose new taxes on themselves could suffer.”

Stupid voters. Always getting in the way.

Here’s some good news, though:

Dalrymple had previously floated the idea that the state could foot more of the bill for social services, but he said that won’t be among the task force’s recommendations. Counties are allowed by law to levy up to 20 mills for social services. Dalrymple said that while his office has asked the state Department of Human Services to develop a potential reimbursement system for counties for a variety of caseloads – a plan that, if workable, could eliminate the 20-mill levy – the task force won’t advance the plan in its bill.

Back in December when Dalrymple was first announcing this task force a lawmaker told me this was “a horrible idea which will only expand the Department of Human Services.” I agree, and I’m glad to see the idea has been set aside by the task force, though I wouldn’t be at all surprised if we saw legislation introduced to do this next year.