Say Anything Blog

Unless you call the use of statewide funds to bailout the local spending that’s driving property taxes so high “tax relief.”

And if you do you’re a fool.

Gov. John Hoeven’s plan to earmark $300 million for school property tax cuts enjoys broad support in the Legislature, while his initiative to cut North Dakota’s income tax is less popular, an Associated Press survey of lawmakers shows.

Some legislators say North Dakotans’ rejection of a ballot measure to cut the state’s individual income tax rates in half showed the issue is not important to most of the public.
The AP survey, conducted last month, showed strong backing for new, lower limits on school property tax rates if lawmakers continue providing a state subsidy intended to keep them down. Lt. Gov. Jack Dalrymple says Hoeven’s proposal should help schools cut their property tax rates by 50 mills or more.

Thirty-eight of the 47 senators and 80 of the 94 House members responded to The Associated Press survey.

Here are the problems with calling a property tax bailout (and that’s exactly what Hoeven’s scheme is) “tax relief.”

First, it takes surplus money from the state level and uses it to prop up over-spending at the local level.  This isn’t tax relief because the money comes from a surplus of tax dollars we already paid in.  Using our statewide tax dollars to buy down our local property taxes is not, by any definition, tax relief.  It’s a zero sum game because we should have gotten those statewide taxes back in relief anyway.

Second, bailing out local spending and capping mill rates won’t a) solve the problem that’s driving property taxes higher (out of control local spending) and b) doesn’t guarantee that you’ll actually pay less in property taxes.  There are two parts to the property tax: The mill rate and the valuation on your property.  Just because the mill rate goes down doesn’t mean local officials won’t jack up the valuation on your property so that you’ll still pay more in taxes. 

And if local officials know they’re going to keep getting statewide money to fuel their spending, they’ll keep right on spending.  Bailouts, whether it be for banks or automakers or free-spending local officials, creates the expectation of more bailouts.

It’s going to be a rough legislative session for North Dakota.  We’re going to grow spending statewide by double-digit amounts yet again.  And we may still see a few years of prosperity as the government keeps taxes high to fuel this spending.  But eventually we’re going to see a downturn.  The rough economic times hitting the rest of the country are going to come home to North Dakota, and when they do we’ll have year after year of double digit growth in government to support on diminished tax revenues.

It will happen, but until then I guess the powers that be in this state are content to play rats to John Hoeven’s Pied Piper routine as he leads as all through his fantasy land of economic growth through higher taxes and government spending.