Political Math: When $10 Million In Property Tax Relief Costs $23.2 Million

property tax

UPDATE: I made an error in this post. The $10 million figure is for the first year of a two year biennium which is what the appropriation was made for. Sorry about that. The fact remains, however, that a shift in spending from local to state is not tax relief.

One of the more contentious bills to come out of the 2015 legislative session was legislation, sponsored by Rep. Mark Dosch (R-Bismarck), to shift $23.2 million dollars worth county social service spending into the state budget.

It didn’t quite go the whole hog. County officials, and Governor Jack Dalrymple, wanted the Legislature to take over all spending on social services. Dosch’s bill was something of a stepping stone to that goal, funding a partial transfer and ordering a study on transferring the rest.

Unfortunately for the counties, North Dakota’s oil boom is over, and hiding local spending in the state budget isn’t nearly as easy as it used to be.

Which is why interim Political Subdivision Taxation Committee, which is studying the issue, seems to be taking a dim view of the $150 million endeavor to move all social service spending back to the state budget.

But this debate over who will pay for social service spending is being built on a dishonest premise. Mike Nowtazki reports on a meeting of the committee yesterday at which the North Dakota Association of Counties tried to paint the shift in social service spending from the counties to the state as tax relief:

So far, the partial shift approved last session has resulted in roughly $10 million in savings for county taxpayers, said Terry Traynor, assistant director of the North Dakota Association of Counties.

On average, counties reduced their social service levies by 2.83 mills, or 18 percent, based on preliminary figures from a survey answered by 37 of the state’s 53 counties, Traynor said.

“I think this is reflective of what happens when you cut their costs. They lower their mills,” he said.

Just so we’re clear, Dosch’s bill funding a partial transfer of social service spending cost state taxpayers $23.2 million. The counties are now saying this produced $10 million in tax relief.

That means we taxpayers spent $23.2 million to give ourselves $10 million in property tax relief. That doesn’t sound like a good deal does it?

And why are we calling this tax relief? Money from our state government isn’t free money. It comes from us. We all pay state taxes too – the sales tax, the income tax, etc., etc. Taking spending out of a county budget and putting it into the state budget is not really tax relief when we all have to pay taxes to support the state budget.

Which isn’t to say that I’m necessarily against shifting social service spending back away from the counties. The counties have pretty much nothing to do with setting policy around social service programs. The state, which shifted social service spending to the counties in 1989 (amid the financial shortfalls which followed that era’s oil boom), is essentially giving these local governments all the obligation to pay for policy they do not set.

Maybe shifting this spending back to the state level makes sense. But please, please, can we stop calling it tax relief?