BISMARCK — North Dakota legislative leaders showed little appetite for lowering or eliminating the state's income taxes this week amid budget cuts requested by Gov. Doug Burgum and looming questions about how lawmakers might tap the ballooning Legacy Fund.
An interim legislative committee heard arguments Thursday, Sept. 6, from the American Legislative Exchange Council, a conservative group that crafts model legislation, that personal and business income taxes inhibit economic growth. The ALEC presentation made the case that the nine states without an individual income tax saw faster population growth in recent years than the nine states with the highest taxes.
"I think we're trying to gather information," said Republican Rep. Craig Headland, chairman of the House Finance and Taxation Committee. "It's kind of hard to ignore these studies that are out there."
But House Majority Leader Al Carlson, R-Fargo, said he wasn't aware of anyone crafting a bill to eliminate income taxes, although he called that a "long-term goal" to make the state more competitive. Lawmakers will start the 2019 session in January.
Individual and corporate income taxes are expected to generate almost $902 million in revenue in the next two-year budget cycle, less than half of the projected sales tax revenues, according to a preliminary forecast presented to lawmakers Wednesday. North Dakota has some of the lowest individual and corporate income tax rates in the country, according to the Tax Foundation, but neighboring states South Dakota and Wyoming don't impose the tax.
"I don't know that our budget situation would allow it to happen this time," Carlson said. "For this session, I would think it would be very difficult to do."
Senate Majority Leader Rich Wardner, R-Dickinson, agreed, noting that lawmakers are still deciding how they might use the state's $5.5 billion Legacy Fund. Some legislators have proposed using part of it to help finance local infrastructure projects.
"We have a lot of things up in the air," Wardner said.
House Minority Leader Corey Mock, D-Grand Forks, was skeptical that slashing income taxes would generate the kind of economic benefits expected by proponents.
The Legislature has cut income taxes several times in recent years, most recently in 2015. But lawmakers tightened belts across state government last year amid diminished revenues, and Burgum, a Republican, has called for state agencies to craft smaller budgets for the 2019-21 biennium.
Burgum is not proposing to reduce or eliminate income taxes "at this time," his spokesman Mike Nowatzki said.