The following information was shared with lawmakers in the NDACo Common Ground e-newsletter.

There is a great deal of pressure this session to approve both property tax relief and reform. This is no easy task as there are many strong opinions on how best to accomplish this.  As you know, counties are dependent on property taxes to pay for local services. Half of the property taxes collected are dedicated to roads and public safety. These local services are important to the safety and quality of life of North Dakota citizens. What citizens don’t want is less law enforcement keeping their community safe and neglected roads. This scenario could be a reality if counties are limited in how much revenue they can generate to keep services running. In fact, budgets are set based on needs and citizen input which led to counties cutting taxes 1.2% in 2022. Furthermore, 22 counites in 2023 reduced mill rates and eight of those counties lowered the dollars they levied.

County commissioners are the closest level of government to the people. It is important to keep local control the focus of any reform measures you consider. Discussion related to caps has counties concerned. A cap will directly limit local control and the ability for local government leaders to respond to their community.

WHAT CONCERNS COUNTIES ABOUT CAPS:

What does a 3% cap on property tax levies mean to your county? Click here to see…  

Counties are not equal. They are different in geographical size, population, property tax base, and economic factors. A cap, regardless of the level, means different things based on a county’s budget and the value of a mill.

• A 3% cap on property tax levies in Sioux County would provide $20,000 in additional funds for all county operations, that’s the low end. For comparison, the median amount generated by a 3% cap would generate $98,000 additional revenue for a county.  
  • Half of the counties in the state will generate less.
  • Most of those counties have little to no ability to generate revenue other than from property taxes.
• A 3% cap would generate more than $500,000 in the state’s four largest counties.   

Existing property tax laws already limit the revenue that can be raised from county property taxes.

• Four counties are at their mill levy maximum for their general fund.
• Four additional counties are within five mills of reaching the maximum limit for their general fund.
• There are 31 counties in the state where one mill generates less than $50,000.

There are numerous costs a county can’t control including:

• State unfunded mandates
• Road maintenance
• Fuel
• Road equipment
• Health insurance premiums
• Mandated valuation increases
• Criminal law changes

WHEN LOOKING AT REFORM ISSUES, WE ASK LEGISLATORS TO CONSIDER:

Budget restrictions remove local boards’ discretion to respond. It is the responsibility of local boards to evaluate funding sources and weigh how to pay for mandated services along with citizens’ requests. In addition, there are investments counties need to make to support infrastructure needs due to population growth and industrial expansions. Board members know the needs of their county and are elected to make those decisions.

• Citizens should have options to decide if a cap is appropriate for their county.  Providing an opportunity for citizens to vote to opt-out or exceed a cap allows for LOCAL CONTROL.
  • Citizens have overwhelmingly approved of recent county measures seeking tax increases to address specific county needs like roads and public safety.
  • Taxpayers ultimately should have a voice on whether they support paying more for services.
• Emergency levies are already restricted on how they can be used and the level of dollars allowed. This levy should be exempt from caps. Local governments need the ability to rebuild the fund to address future emergency events. Situations where a county would need to utilize funds from the emergency levy often can’t wait two years for a vote.
• If caps of any kind are to be included in tax reform policy measures, the legislature needs to discontinue passing additional costs to local government of which they have no control.
• Property tax exemptions shift the tax burden to other taxpayers. An individual pays more property taxes when a property tax exemption is provided to someone else. For property tax fairness, we encourage the legislature to refrain from passing any new exemptions and to evaluate property tax exemptions previously approved by the state that can or should be funded by the state versus passed on to taxpayers.

ENDING THOUGHT…

It is critical that property tax reform measures allow for flexibility and do not hinder growth. Local control is imperative. Citizens should have a say on the services they want in their community and have an opportunity to support paying more for those services.