Pending bills set to make property tax system more understandable
GRAND FORKS — One legislator admitted it wasn’t very “sexy” work, and that meetings were akin to “watching paint dry.”
During a Greater North Dakota Chamber event this month, state Sen. Dwight Cook, R-Mandan, detailed five bills being crafted in the interim Taxation Committee, which he chairs. He labeled the bills a “full-court press on reform.”
The bills would:
- Change the mill-rate system, which is based on units equivalent to a 10th of a cent, into one based on dollar amounts.
- Create one class of assessors, instead of the multiple classes each with their own training qualifications that exist today.
- Make clear that only elected officials can levy taxes.
- Create uniform tax statements that are more easily comparable across the state.
- Eliminate the requirement that notification of tax increases be included in the newspaper, and instead require that it be mailed directly to all taxpayers.
Cook said the legislators intend to introduce the bills during the regular legislative session, which will convene in January.
Consolidation Meanwhile, Gov. Jack Dalrymple’s Task Force on Property Tax Reform is studying the vast range of property tax levies that exist in statute, ranging from the general-fund levy to more specific ones such as the “aid to county fair” levy. Some will likely be recommended for consolidation because they’re used for similar purposes, while others could be eliminated altogether.
“Much of what we’re doing is trying to streamline all of the mini taxing authorities that exist in state law,” Dalrymple said in an interview this month.
Consolidation will likely make elected officials prioritize their spending, he said, and allow for better comparison of property tax rates among political subdivisions. He said he hopes to have a bill introduced by legislators next session.
The reform efforts are moving ahead more than a year after North Dakota voters overwhelmingly declined to eliminate property taxes, widely regarded as the least-popular tax.
“I think to the extent that people can understand (the property tax system) better, they will accept it better,” Dalrymple said.
Committee work Currently, North Dakota property taxes are calculated using the taxable value of a property multiplied by the mill rate of the local government with jurisdiction in the area where property is located. The taxable value of a property is 9 percent or 10 percent — the former for residential property and the latter for commercial and agricultural — of the assessed value. The assessed value is half of the property’s “true and full value.”
The owner of a home worth $200,000 in the city of Grand Forks would pay $2,766.65 in property taxes if it’s paid by Feb. 15, according to Grand Forks County Auditor Debbie Nelson. That takes into account the state’s 12 percent buy-down of property taxes.
The total mills in the city of Grand Forks, which includes the airport, county, parks, school district and state is 367.71.
The interim committee’s proposal would change the mill system to tax a dollar amount for every $1,000 of the property’s true and full value, according to Rep. Mark Owens, R-Grand Forks, vice chairman of the Taxation Committee.
“It makes it a simple mathematical formula you … figure out in your head as a property owner,” Owens said.
Meanwhile, another bill would create one class of assessors in the state. Cook said there are four classes of assessors in North Dakota, with the difference being the amount of training they’re required to take.
“There’s a difference in what they know,” Cook told legislators and business leaders at the chamber event. “I want it done right. And if it’s not done right, your property taxes aren’t going to be fair.”
A bill draft posted on the Legislature’s website would require 180 hours of “assessment and appraisal instruction” for certification.
On the uniform tax statement effort, state Tax Commissioner Ryan Rauschenberger said there are about eight “different-looking” property tax statements across the state, making it difficult for people who own land in different parts of the state to compare their property taxes. A uniform tax statement would help alleviate that issue because “information would be kind of in the same place on each statement,” he said.
Rauschenberger said his office is working with county auditors on the feasibility of a uniform tax statement.
Simpler taxes State leaders say the reform efforts are mainly driven at making the system more understandable.
“The No. 1 benefit would be the reduction in anxiety about what is inside the property tax statement,” Dalrymple said. “But a secondary benefit, I do think, it will be to work in the direction of saving on taxes merely because … we’ll have greater simplicity.
“And I think that will make commissions and councils realize that they can be more efficient with the authorities that they do have,” he added.
Grand Forks City Council President Hal Gershman, a member of the governor’s task force, said he thinks there is a need to clean up the property tax system, but wants to make sure cities don’t lose local control through the consolidation process.
“We need to be flexible,” Gershman said.