April 7th, 2017

In an interesting turn of events, the State Senate Finance and Tax Committee has amended and given a DO PASS recommendation to HB 1361.

HB 1361 started as a limit on local property tax increases, with a way for local government to get out of those limits by asking the voters to remove the limits.

The Senate Finance and Tax Committee decided to turn that formula around and say that local voters must bring a local initiated measure to impose the limits

The requirement for signatures to do this is 10%, which is very low and taxpayer friendly threshold.

This approach was given a 4-2 DO PASS by the committee, and if the full Senate agrees, the House would be wise to simply concur with these changes.

This bill very well could be the beginning of true property tax reform for everybody.

-Dustin Gawrylow, Managing Director

North Dakota Watchdog Network

March 28th, 2017

Last week, the House Finance and Tax Committee gave a DO PASS recommendation to SB 2166, and amended it to fully fix the problem in Bismarck with over-lapping Renaissance Zone benefits existing inside a Tax Increment Finance District (TIF).

In the newly amended version, two things will be prevented that the City of Bismarck has abused for decades:

1. A property that has been approved for a Renaissance Zone benefit cannot then go into a Tax Increment Finance Zone or District.

2. A property in a Tax Increment Finance Zone or District cannot be approved for a Renaissance Zone.

These two features address the problem with Bismarck's approach of exempting property under the Renaissance Zone program, then dumping those properties into the "perpetual TIF" that overlaps the Renaissance Zone by 80%+.

Under the provisions of SB 2166 as amended by the House Committee, it would seem that Bismarck would finally have to to pick one or the other - but not both at the same time.

Please contact your personal legislators by clicking here and telling them to support SB 2166.

March 23rd, 2017

It's been a few weeks since the three big property tax reform bills were heard in their second committees, and as these bills move forward, legislators need to hear from you on how much they are really needed.

HB 1361 creates limits on how much your local governments can increase your property taxes, but it allows your local government to ask you to vote to remove those limits on a localized case by case basis.

HB 1182 removes the income tax giveaway from the Renaissance Zone program but leaves the program in place.

SB 2166 requires county and school district approval of Renaissance Zones, and requires any tax exemption or incentive program lasting more than 5 years to also receive county and school district support.

As a package, these three bills represent the bulk of property tax reform in 2017.

Please contact your personal legislators by clicking here and telling them to support HB 1361, HB 1182, and SB 2166.

February 23rd, 2017

The 2017 legislative session has been a bumpy one, and for as critical as we have been and will continue to be, there is some progress on the corporate welfare reform front (which intersects with the property tax reform goals).

We have told you about HB 1182 and how it eliminates the income tax exemption for Renaissance Zone Projects.

Yesterday, while the House was creating a new tax on frack water, the Senate was making some reasonable and considerable reforms to the way local property tax exemptions are approved by passing SB 2166.

This bill passed the Senate by a vote of 38 to 8, which is a shockingly good vote tally on the Senate side.

It is our hope that the House will pass SB 2166 as is, just as we hope the Senate will pass HB 1182 as is.

These two bills combined would represent a huge improvement in how local government manages tax giveaways for businesses and developers.

Local elected officials, developers, and investors who benefit from these reforms are scared to death they will lose their corporate welfare if the state legislature makes it more difficult to receive those benefits.

In an article yesterday, the Mayor of Fargo says that reforming corporate welfare powers will "cripple" Fargo.

Mahoney and City Commissioner Dave Piepkorn warned in a letter to Republican House leaders the day before the vote Thursday, Feb. 16, that buildings are being constructed in Fargo with the assumption that, when completed, developers would attract tenants with income-tax breaks.

“I think this thing will impact businesses’ decisions to be in downtown Fargo,” said Mike Allmendinger, general manager of Kilbourne Group, the most active downtown developer and a firm founded by Gov. Doug Burgum -- who could veto the bill if it passed the Senate.

The group and its partners have plans to start construction this spring on the $98 million Block 9 high rise. The firm is already building the Roberts Commons, a new mixed-use building and parking ramp downtown a block away from where Block 9 would rise.

Apparently the only thing keeping Fargo growth alive is the subsidy that taxpayers who do pay their full share on behalf of those who get these sweetheart deals.

It is well known that prior to becoming governor, Doug Burgum was one of the biggest proponents and users of these exemption powers.

Even now, the governor has interest with what goes on with this as documented by this story today about Fargo's latest decisions:

In other actions, the [Fargo City] Renaissance Zone Authority also:

• Approved incentives for Kilbourne Group's rehabilitation of the old Metro Drug building. The firm, owned by Burgum but not presently under his direct control to avoid conflicts of interest, intends to invest $1.6 million in the $523,000 building. Authority officials praised the project for helping to make Second Avenue North more pedestrian friendly.

An op-ed by Sean Foss (of the law firm "O’Keeffe, O’Brien, Lyson & Foss, Ltd." in Fargo) today ran, urging Governor Burgum to use his 1st Amendment rights to threaten to veto legislation such as HB 1182 and SB 2166.

There has been a long standing belief that it is illegal by state law, a belief that Former Governor Ed Schafer has stuck to:

Laws and constitutions vary from state to state, former North Dakota Gov. Ed Schafer recently pointed out while interviewing Minnesota Gov. Tim Pawlenty on a radio talk show.

They were discussing some of Pawlenty's vetoes, which came after he told lawmakers in writing he would reject the bills.

Schafer sounded a bit envious when he told Pawlenty that in North Dakota, it is illegal to threaten a veto.

In his op-ed, Foss says:

On February 22, 2017, The Forum published an article on the Legislature’s potential elimination of income-tax breaks for new businesses and residents in Renaissance Zones in cities across the state. As noted in the story, one of the biggest beneficiaries of such tax breaks has been Kilbourne Group, which is owned and was previously operated by Governor Doug Burgum.

This legislation sets up an interesting dynamic, as Burgum could veto any final bill to help promote ongoing development in Renaissance Zones. Burgum’s detractors and opponents could use a veto against him, arguing that he is simply trying to help his own bottom line. The conflict of interest is clear.
According to the article, “Burgum’s office said he prefers the Renaissance Zone law ‘in its current form.’” Does this mean he would veto the bill? We do not know because, as the article notes, state law prohibits governors for threatening a veto. As a result, beyond his office saying he prefers the existing law, Burgum has not provided any indication of whether he would actually veto the bill.

[...]

In sum, if Governor Burgum intends to veto the bill eliminating tax breaks in Renaissance Zones, or any other bills before the Legislature, he should proudly declare as much. Governor Burgum and his successors are likely the only ones who have standing to pursue a claim to invalidate the prohibition against threatening vetoes, as a governor is the only one who is directly injured or impacted by the law. North Dakota has previously seen cases where the Governor sued the Attorney General and Secretary of State to have legislation impacting the executive branch declared unconstitutional. See State ex rel. Link v. Olson, 286 N.W.2d 262 (N.D. 1979).

The question is whether Governor Burgum will feel his free speech rights are important enough to potentially upset his relationship with the Legislature. Here’s hoping he does.

For the sake of good public policy, the House and Senate need to work to find ways to pass these reforms, and Governor Burgum should sign them.

It has been over a decade since the legislature started promising to enact Property Tax Reform.

They spent a lot of money on Property Tax Relief, but actual reform has been like trying to catch a unicorn.

The movement to reform corporate welfare tax giveaways at the local level would be a good first move to prove to the public that law makers are serious,

Otherwise, North Dakota citizens might have to take it into their own hand like in the 1960's and early 1970's.

By the 1960s, many North Dakotans believed the state constitution was in need of modernization. Mounting public opinion supporting a major revision of the state constitution during the late 1960s led to legislative action. During the 1969 Legislative Session, the House and Senate passed a resolution for a constitutional amendment to authorize a state Constitutional Convention.

The people themselves could take this approach with an Initiated Constitutional Amendment to put the legislature on notice.

Without meaningful reforms, it may be the last ditch option.