February 25th, 2015

For the last four sessions, the North Dakota Legislature has been in the business of spending state tax dollars by paying local government to lower property taxes. In rare cases, the state has gotten what it paid for. But in most cases, local property taxes did not decrease by the full amount the legislature intended.

Of course, it never could or would, because property taxes are levied by local elected officials. Without passing restrictive laws to protect local taxpayers and rein in their local governments the state was never going to get a perfect situation.

During the 2013 Legislative Session, much of the previous "property tax buy-down program" spending was folded into the overall Education Funding Formula - a move concocted by Governor Jack Dalrymple (R) - even though it meant that if revenue ever fell off a cliff (like it is in the process of doing) education funding would have to be cut to remove the state from buying down property taxes.

This move was brilliant for anyone that wanted to set Republicans up for a huge fall if ever the state could not fulfill the new, much higher, education funding levels.

To alleviate this issue, House Republicans insisted that part of the state paid property tax relief be done in the form of a 12% credit, paid to counties on behalf of property owners.

During the last election, Republicans actually ran on the platform of doubling this portion of the property tax scheme.

The State Senate is going the other direction - in Senate Bill 2005 the 12% credit is being reduced to 11%.

This change passed the Senate by a 47-0 vote.

While the program was not sustainable or the right approach to begin with - Republicans for the last 4 sessions have promised it would be.

A mere 1% cut from 12% to 11% proves that this approach to property taxes was not a good policy initiative and would not last forever.

Property taxes will now go up faster than ever as the state tries to retract itself from a role it should never have played in the first place.

Without reforming the way local government officials can manipulate property taxes with the complicated mill levy and valuation system, nothing will ever change.

1. Eliminate all discretionary local property tax exemptions once current agreements have expired, and replace all state-mandated exemptions with a single, flat, universal exemption of at least $75,000 for every property – residential, commercial, and agricultural.

2. Standardize the property assessment process by putting the state tax department in charge of training and overseeing all property assessments statewide, and prohibit the use of private property assessment companies whose motive for compensation is a track record of higher tax revenues.

3. Eliminate the automatic tax revenue increases created by higher property values. When a local government wants more property tax dollars beyond those created by new construction, they should have to go on the record as raising your taxes.

4. Freeze property values for taxation purposes after 15-years of consistent owner-occupancy.

5. End the practice of foreclosure for tax reasons entirely, replace with a wage garnishment process.

6. Either assess multi-unit residential properties based on the revenue they generate just as agricultural land is assessed based on production values; OR eliminate agricultural land taxes altogether, and tax farm residences the same as town residences.

The public must demand that if money is being spent in the name of reducing property taxes that the result be lower property taxes. If that’s not the end result, the plan is nothing more than the political equivalent of a used car sales pitch.

"Property tax relief" that does not make its way to the property owner's bill is not really property tax relief.

-Dustin Gawrylow, Managing Director

North Dakota Watchdog Network