North Dakota’s Four Largest Cities Exempted Over $810 Million In Property From Taxation

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Written By:
Rob Port

Mar 22, 2012
8:55am

One of the primary issues driving public consternation over property taxes is how high property taxes are in many parts of the state despite efforts by the state legislature to implement property tax relief. Many local entities, facing a tax on property tax rates (mills) from the state, have opted instead to jack up valuations on property. They’ll deny that this is the reason, of course, but when many communities got their first property assessments in years right after the state capped mills it was pretty clear what was happening.

So what’s driving high property taxes? Big local spending is one problem, but another problem is how much in property taxes are given away.

One staple of economic development efforts in the state is the discretionary property tax abatement (some properties, such as state property and church property, get mandatory exemptions). This is done a lot of different ways. Sometimes an abatement is granted in a “Renaissance Zone.” Sometimes an abatement is granted in a Tax Increment Financing (TIF) district. But however it’s done, when property values are exempted from taxation, it narrows the property tax base, putting upward pressure on the property taxes those without an abatement still have to pay.

So how much in property values are being exempted? A lot if a sampling from the state’s four largest cities tells us anything. I made an open records request to tax assessors in Minot, Grand Forks, Fargo and Bismarck and found that the four communities combined exempted $810,023,200 in property value from taxation in 2011.

Here’s a breakdown by community (again, this is just discretionary exemptions):

Minot: $22,949,200
Grand Forks: $70,320,500
Bismarck: $327,733,500
Fargo: $389,020,000

Keep in mind that this doesn’t include exemptions made by the counties each of these communities are in. If we tallied exemptions handed out across the state, we’d have billions of billions of dollars worth of exemptions.

In short, one big reason why property taxes are going higher is because our government is handing out so many exemptions. And when you look carefully at just who it is opposing Measure 2, which would end the property tax, it becomes very clear why they’re opposing it.

You wouldn’t think a group like the North Dakota Chamber of Commerce would be against any proposal that would lower tax burdens on businesses significantly. So why are they opposed to ending the property tax? Because it would end the ability of the government to grant special property tax deals to specific businesses and organizations.

The property tax abatement, despite the fact that it inflates taxes for those of us not getting the abatements, is the #1 tool of crony capitalism in North Dakota. And the crony capitalists, nor their allies in the government, want to lose it.