This session, the state of North Dakota continued in its efforts to keep property taxes and basic services local while providing substantial permanent relief to taxpayers and reform to the system.
In recent years, state programs like the 12% property tax buy-down have been highly publicized, but only provided short-term relief to property taxpayers in prosperous times. It is a program that grows exponentially and puts increased pressure on the general fund.
The most impactful property tax relief offered by the state has been paired with reform through the takeover of programs that are typically funded by local taxing districts — cities, counties, and school districts. Most notably, the state removed over $1 billion from local property taxes previously levied by local school districts for K-12 education.
This session, the legislature relieved local governments of the costs associated with county social services programs, which are mandated by state and federal government, freeing up local dollars to pay for local issues. In addition, the takeover incentivizes consolidation, resulting in more efficient delivery of services and better use of taxpayer dollars. This reform removes up to 20 mills of levy authority in each county, and replaces a large portion of the 12% buy-down program across the state.
When considered together, education and social services property tax relief efforts will total over $1.362 billion in state-paid contributions in the upcoming biennium. This is 39.1% of the amount that would have been the responsibility of North Dakota property owners prior to 2007.
These legislative changes, along with increased transparency and local involvement, will result in a formula that provides real, permanent property tax reform. Accountability at the local level requires local officials to take a focused and fiscally responsible approach when considering local needs, rather than a one-size-fits-all, short term fix like the buy-down program. At the end of the day, permanent reform is more predictable and sustainable and best for all North Dakotans, and that’s what legislators delivered.