Guest Post: Local Governments Move The Property Tax Goalposts

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As the legislature battles with itself over how to provide property tax relief, local governments are showing once again that they are the ones really in control.

Out of Williston comes a story about how residential property values will climb 15-35% on local residents.

As the article states: “But Gooch-Egge cautioned that the increase in property values does not automatically mean that taxes will be higher for people living in the city, with tax decisions made by the city commission.”

This is true, but it is dependent upon local government reducing the mill level by as much as values went up.

How likely is it that local government will reduce their mill levies by 15-35%?  The answer is: “Not very likely.”

The story is the same in Dickinson where: “Overall, homes in Dickinson have been assessed on average 26 percent higher than a year ago while commercial real estate went up a whopping 42 percent.”

But in the story about Dickinson there is a quote from Dickinson City Assessor Joe Hirschfeld which is flat misleading:

“Historically, we had a larger-than-typical adjustment percentage this year,” Hirschfeld said. “Valuations, although utilized for taxes, don’t really have to do with taxes. Valuations are to help the mill rate and the budgets interact. For those concerned about their taxes, they need to be speaking to city commissioners, county commissioners and school districts about their budgets and making sure those budgets stay under control. An increase in values does not always mean an increase in taxes.”

Hirschfeld is trying to claim that valuations don’t have anything to do with taxes – that is flat wrong – and given his position as City Assessor he should know better.  Mill rates are applied to valuation, so if your valuation goes up and your mill rate doesn’t go down by as much, your taxes will go up.

This is the obstacle that the legislature faces on property taxes – local government officials who do very little about their own property tax burdens while the state does what it can to “buydown” property taxes with more education funding.  And to make matters worse, local officials publicly mislead homeowners about the how property taxes are calculated.

What is the legislature supposed to do when local government is working against their efforts???

For as long as the legislature has tried to reduce property taxes by pumping more state money into education – cities, counties, and park districts have done little to nothing to make thing easier – and in fact many times they try to use those state funded reductions via education to grab more for themselves.

The legislature needs to come up with some real reform measures for property tax, or else all the money they are sending down to school districts will be for nothing.

Perhaps it is getting to be time to once again treat local property tax as a local issue – after all, local governments do not seem to be all that grateful for the state attempts so far.

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  • kevindf

    If there is going to be a property tax, it should be based on the cost of government services the property requires, not the market value if the property is sold.

    • jimmypop

      thats a VERY interesting concept. not sure where youd start or how it would play out, but at first blush it sure sounds logical.

      youd surely catch hell from the lower incomes. if this was the base line, a big house really does not need much more ‘service’ than a small house. nor does a big house gain more from a park district.

      • kevindf

        You could also base the tax on the population of the household.

        • joeb

          Pay more because you have a new baby? Talk about turning screws…

          • kevindf

            Blame the greedy education cabal.

  • SusanBeehler

    Mandan probably had a big jump too. I am waiting for open records request. August 30 5:30pm is there eqalization hearing. People better show up at these meetings or your property taxes will be going up. They will use the state relief to justify it.

  • ec99

    One more time: the government owns everyone’s property, people just rent it from it. You don’t pay the taxes, the government takes it over. It no longer has anything to do with services. It’s about boondoggles to satisfy the whims of a few who would never think to pay for them themselves.

  • jimmypop

    if you dont like local leaders, you can vote them out or even run for office yourself. it is THAT easy.

    further, can anyone show us REAL examples of out of control local taxes?

    something like this with a REAL address we can all see on a government website; my house costs $125,000 and i was taxed $3,000. the next year it was worth $127,500 and i was taxed $7,000.

  • Misquoted

    If you’re going to state that local officials know very little about the tax system maybe you should become educated first. Government entities do not reduce mill levies. They budget in dollars and the mills fall where they fall. When you’re quoting public officials from something that was written in their local paper those quotes should be verified first. Local media is notorious for misquotes; which is what is happening above.

  • zdavid53

    Guess we should have voted for the property tax referendum when we had a chance. Now its sock it to you time. So much for property tax reform.

  • Captjohn

    As I said 3 months ago the only way you are going to get political subdivision spending under control is limit their income in total. If the legislature said you can only raise property taxes in total on a piece of real estate by 3% a year they would have to watch their budgets.
    As it is school districts are enjoying a tax shift from property tax to state dollars out of the general fund. As SAB has pointed out that isn’t a very sustainable way of doing business. This has then allowed the other political subs to to spend. What I think is intriguing is that the energy counties are going to feel it the most as assessed values sky rocket. How does everyone feel about the 100’s of millions going to energy counties from the state’s general fund and the citizens of those counties getting hit with ever increasing property tax burdens?

    • joeb

      You failed to ask how everyone felt about the 100s of millions coming out of the energy counties, while a trickle comes back to repair roads, upgrade emergency medical, firefighting, and other critical services.

      We’ve been told to “hope”: Federal money will fill the gap (while the Sequester is on, no less!). If the rest of the state doesn’t want the energy counties to have the money to fix the infrastructure, the negative impact will eventually be seen, not just in destroyed vehicles and dead people, but in the coffers as well.

  • Drain52

    Tough cookies for Williston and Dickinson. They made their bed when they voted against Measure 2. Now let them sleep in it.

    • joeb

      Not everyone here out voted against measure two. Sadly, though, some of the people I talked with had been told their farmland taxes would increase by a factor of five if the measure passed. Rather than read the measure, they took the low-information route and let someone else tell them what was in it.

  • joeb

    Williston, here. The house cost $34,500 in 1987 (after the oil boom died). This year, the assessment was raised $30,500, even though no substantial improvements have been made to the property since a single stall garage was moved in in the late 80s.

    From folks I have spoken with, this increase is typical, but last year saw a 30% increase in assessment, and the year before nearly as much. The house is not on the market, not for sale, and is 100 years old, and in three years has been deemed to be worth three times as much as previous assessments. The first of these galloping reassessments arrived the day after the City 1% sales tax was voted down, and those notices had to be in the mail before the votes were counted, even though the supposed selling point of the sales tax was lowered property taxes.

    Eventually the City hired a slick ad campaign and got the additional 1% sales tax, too.

    What I would like to see, If we can’t abolish paying rent to the government entirely, is a property tax based on the last selling price of the house. That was the fair market value, not some wild-eyed guess based on the price of new housing across town with granite counter tops and .central air, and where indoor plumbing wasn’t an afterthought.

    Additionally, this would be more fair to seniors and lower income folks who bought their home back when and are now on fixed or limited income.

    The next buyer would pay whatever they found to be ‘fair’ and pay taxes on that price. When the market was up, houses would cost more and be taxed based on that purchase price, when the market was down (and in oil towns it goes down, too) and a property sold, the taxes would be based on that price. Simple enough, and more market based for a specific property.

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