North Dakota GOP lawmakers propose property tax cut
Under the proposal, the state would take on the portion of property tax dedicated to K-12 education funding.
BISMARCK — A team of Republican North Dakota legislators has unveiled a proposal that would cut property taxes and use the state's oil tax savings account to cover most of the difference.
Mott Sen. Donald Schaible and Bismarck Rep. Mike Nathe say the plan they announced at a Bismarck press conference on Monday, Sept. 26, would reduce property taxes by about 25% statewide, addressing a key concern of many North Dakotans.
“This bill would help all property owners, residential and commercial, but especially the seniors and middle-to-lower-income residents who may not pay income tax but often do pay property taxes,” Schaible said.
The tax reduction plan has not yet been written down as a bill, but Nathe said a formal proposal will be filed for the legislature's consideration when its biennial session begins in January.
Under the proposal, the state would assume the part of property tax apportioned to K-12 education funding. The plan would also freeze the education-dedicated piece of property valuations for two years.
That means the state would have to pay an estimated $340 million in additional school funding for the two-year budget cycle starting in summer 2023.
The legislators said investment earnings from the $7.9-billion Legacy Fund could cover the extra burden on the state, though Nathe noted the money could come from other savings funds. The voter-approved Legacy Fund receives 30% of the state's oil and gas tax revenue.
The proposal does not touch the segments of property tax that fund cities, counties and parks.
“The state is constitutionally obligated to provide an education for all North Dakota students, (so) the education portion of one's tax bill is the only part of property taxes that the state can have an influence on," Nathe said in a statement. "The state would now be paying 85% of education funding versus the 70% that it's currently doing."
The proposal would also include a provision capping the amount of tax school districts can levy for the cost of education, according to a news release.
Nathe noted the proposal mirrors a bill passed by the legislature in 2013 that moved a chunk of education funding from local taxpayers to the state.
“This is a tried and true method to reduce property taxes,” Nathe said. “We are not reinventing the wheel with this bill.”
Schaible and Nathe acknowledged their plan will likely compete with a proposal released by Republican Gov. Doug Burgum last month to cut income taxes in the state.
Burgum said in a statement Monday that North Dakota is fortunate to be in a strong financial position that "allows for consideration of multiple tax relief proposals."
"We look forward to continuing to work with the legislature on a package that provides tax relief for all North Dakotans by truly cutting taxes and reducing the amount of tax revenue that government collects," Burgum said.
Schaible said a property tax cut would be more impactful than an income tax cut, especially for the state's older residents, but he and Nathe also remarked that North Dakota is in an advantageous financial position to be weighing both options.
House Minority Leader Josh Boschee, D-Fargo, said the proposal from his Republican colleagues addresses a lot of the property tax concerns he has heard from constituents. The Democrat said he also likes that the plan draws on Legacy Fund earnings to cover the added costs to the state.
Boschee expressed some reservations about capping how much school districts can levy in taxes, noting that "no two communities are the same," and a blanket rule might hinder some districts.