Rep. Mike Nathe On Property Taxes: “Now it is up to the local governments to do their part.”

Tax

Rep. Mike Nathe has an excellent letter in the Fargo Forum today pointing out that, on the issue of property taxes, the ball is back in the court of local governments. With local governments reacting to yet another massive state buy-down of property taxes with plans for aggressive new spending, and de facto tax increases resulting from you rising property values and static mill rates, Rep. Nathe points out that if your property tax bill doesn’t go down this biennium – or, worse, if it goes up – blame your local leaders:

Whether all this property tax relief will end up in your pocket is now in the hands of the local governments. These local government officials have the choice of passing the state-funded tax relief on to their taxpayers or letting rising values and increased spending consume part or all of the state-funded property tax relief. Taxpayers and voters must hold their local elected officials accountable for how this tax relief is managed.

Even in the face of rising values, these boards and commissions will have the choice to reduce the local property tax mill levy to ensure local taxpayers realize the tax relief intended by the state Legislature.

The Legislature has heard the call from the residents of North Dakota to reduce property taxes and has responded by providing more than $850 million in property tax relief. Now it is up to the local governments to do their part.

It still makes me a little nauseous to call the legislature’s buy-down of property taxes tax relief. Using revenue from state taxes to buy-down local taxes isn’t tax relief. The state’s money isn’t free money. That comes out of our pockets too.

But setting that issue aside, there is clearly a lot of anxiety that Governor Jack Dalrymple’s property tax relief plan, approved by the legislature, is going to go down in flames after a contentious fight over a ballot measure to eliminate property taxes was killed with promises for a legislative fix.

If property taxes don’t go down, with the state throwing hundreds of millions of dollars at local governments to make it go down, it will be a political disaster for Dalrymple and Republicans and a “told you so” moment for the proponents of eliminating property taxes.

That’s why the Chamber of Commerce, the group which lead the charge against eliminating property taxes, has been begging locals to get with the program too.

But will locals listen? I suspect they won’t. They’ve been having their cake and eating it too since the state began this absurd program of property tax buy-downs. Why would they do anything to derail the gravy train now that state leaders are on the hook?

It might be time to start treating the property tax problem as the local issue, driven by local policymakers, it’s always been.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • zipity

    Sure. Local governments are going to voluntarily spend less of “other peoples money”.

    Wait….I think I feel a flying monkey exiting by alimentary canal.

    When it comes to tax dollars, the only word our “leaders” know is MORE.

    • http://sayanythingblog.com Rob

      There’s truth in that. The legislature dumps money on the locals, and then expects the locals to just cut taxes?

      It’s just not going to work.

      • SusanBeehler

        I agree with you !

        • http://sayanythingblog.com Rob

          Even stopped clocks are right twice a day. ;-)

          • SusanBeehler

            Thank you

        • zipity

          That explains the pig I saw out crop-dusting today….

          • Drain52

            Or the icicles in Hell.

      • Jonesy

        It’s like when they pass a property tax increase to pay for a certain thing (convention centers) and that increase is supposed to go away after 15-20 years. I’ve never seen one actually go away when the time period ended.

        • http://sayanythingblog.com Rob

          Right. Here in Minot I think we’re still paying a sales tax that was to fix the floor at the All Seasons Arena. That tax passed right around the time my family moved here in 1990, and it’s still around. Repurposed, of course!

  • Eric

    While I agree local property taxes are a local issue, the state legislature is passing the buck on this one. They told us to vote no on Measure #2 also and said they would help fix it. By not putting a mandate on this to the taxing entities, they did nothing for us. And I agree with Rob, this is not tax relief, just a shuffle of our taxes being paid. We need to elect both state and local leaders who want to lead and not pass the buck as they have done here.

    • http://sayanythingblog.com Rob

      Fair points, but I’m at least satisfied that some in the legislature are acknowledging that this approach to property taxes might not work.

      • Eric

        Thanks Rob. I realize some know this isn’t going to happen, but they didn’t vote like that. The republican majority doesn’t have a conservative in its mist as of now. All they do is see a pot of money and spend it. When will real reform come?????? Not until a measure like measure #2 passes. Not until then will they actually get it. I am sure the State Chamber is scrambling. They were the lead in getting people to vote against #2 and they are scared you know what.

        • http://sayanythingblog.com Rob

          They are definitely going to be between a rock and a hard place if locals don’t keep property tax bills in place. Their primary argument against Measure 2 last time was that the legislature would fix it. Well, the legislature has had its chance (they had a chance in 2007, 2009 and 2011 too), and if there isn’t a sense that things are changing, it will be hard to stop the momentum of another effort to abolish property taxes.

          • joeb

            How about a measure which fixed the assessed value of property at the last price paid for it? That way retirees who bought their place in ’45 for $4,000 wouldn’t be paying taxes on an escalating assessed value, and people would know what their home was valued at, short of making additions to the buildings.

    • Jonesy

      They said vote no on M2 because they didn’t want to be responsible for COMPLETELY funding local government. At this point they just provide a portion of the funding and if there are problems with spending/lack of money at the local level they can point their finger at the local leaders. Telling us to vote no on M2 was more to protect themselves from responsibility than anything else.

      • Eric

        True enough. But they did tell us to vote no and they would help fix the problem. They did nothing to fix the problem. They just used the old theory of throw enough sh_t on the wall and something might stick. Nothing has stuck yet. We need to watch the local taxing entities as the budget season is near and they must be held accountable for this hand out or we need another measure #2 and they can all go beg the legislature for their money.

        • http://sayanythingblog.com Rob

          It’s really a testament to the lobbying power of the counties/cities. They’ve muscled the legislature into this position where they have to take responsibility for a tax they don’t levy, while funding spending they don’t control.

      • http://sayanythingblog.com Rob

        I think it was reasonable to have a debate about the logistics of having the legislature fund everything that is presently funded by the property tax.

        Honestly, I’d prefer a stab at abolishing property taxes that states simply that neither the state nor any political subdivision thereof can raise revenues through a property tax. Then let locals and/or the legislature figure out how to fund needs from other sources.

        The property tax is fundamentally flawed.

  • Yukon

    Mike Nathe’s letter primary subject of throwing the responsibility back to the local government was spot on. But he was pretty damn arrogant about what a great job the legislature did with property tax relief and how it’s not the legislature that spends property taxes. He doesn’t get it, it’s the responsibility of the legislature to set the rules of property taxes and that public hasn’t been asking for relief but reform!

    • Eric

      He doesn’t get it, it’s the responsibility of the legislature to set the rules of property taxes and that public hasn’t been asking for relief but reform!
      That is spot on, we need major reform, not a shift of dollars as this was again this year.

      • http://sayanythingblog.com Rob

        I’ve been calling this a shift since 2007.

        Really, the legislature is afraid of the locals. For whatever reason, they have a ton of clout,.

    • SusanBeehler

      If the legislature can cut a check for the Homestead Property Tax Credit, to low income elderly and disabled, if Mandan is allowed to cut checks to business owners for rent incentive;why can’t they give a check back to the property taxpayer and call that property tax relief ?

      • guest

        Susan…when you asked this question of your legislators what was their answer? You wont get the answer to your question in this blog. And did a recall gain a majority in mandan after the walmart decision?

        • SusanBeehler

          I didn’t get an answer from lawmakers either. During other hearings on property tax when checks being given like a refund, the ND Constitution was used as the excuse why it could not be done. On the renter’s refund I did not think it was possible, but I did not put it in a constitutional context, I put it in the context of a property not even paying property tax and I thought the elderly residents were getting a refund based on property tax even though no property tax was paid. But maybe it is just because they are paying too much rent for their income. Here is the program http://www.nd.gov/tax/media/pressrel/2013/5-15-13.html The legislator could not address this concern and no staff present could answer when it was posed as a question by a legislator. They do get a check but maybe it is like “welfare” and is not tied to property tax.

          I do not know about any recall in Mandan on the Walmart decision. The only recall I know was held was back in 2006 and that had to do with some residents being unhappy with the settlement in a railroad lawsuit.

      • http://sayanythingblog.com Rob

        A tax credit isn’t the same as cutting a check.

        But even if the state cutting a check was legal, is that what you want? Redistribution?

    • http://sayanythingblog.com Rob

      I wouldn’t call him arrogant – Nathe is a good guy – but he is wrong about the legislature’s property tax relief. It’s not relief. The state’s money is not free money.

      The legislature has allowed itself to be boxed into a corner on this issue, and they’ve nobody to blame but themselves. Most legislators will acknowledge this privately.

  • Tim Hines

    Great, well written article!

  • guest

    You guys want local spending cut. What specifically do you want cut. The cities only get about 1/3 of prop tax collected and over half of that goes to public safety. So now down to 15% for city maybe to play with. And how many of you complain now about delay in snow removal and pot holes? Typical coffee shop gibberish.

    • Eric

      In this case, we (I) don’t want a cut per say, just to get my share of the tax shift the legislature just did. They gave no restrictions on the money so the local taxing entities can do as they please. Just ask Minot about their school board and what they plan to do. It’s scary.

      • sbark

        ……….retroactivily I’d add. My property taxes have nearly doubled in the last 2 yrs without a appreciable mill levy increase………taxation without representation as our Founding Fathers would’ve declared.

    • sbark

      where to begin………Schools with an ave of 10 kids per class don’t need a 25k electronic sign that take eyes off the road on a state hwy right in front of the school…how many other’s that are not as visible?

      How bout’ relaxing osha and epa regs so that the local county crew can load gravel out of local gravel pits and fix rural gravel roads without having to hire much higher cost outside sources…..how many other instances are they forced to high cost solutions?

      Wouldn’t retirement plan fiasco also effect all levels of govt not just state level?….how do those shortfalls get paid when a employee retires and his pension is then set aside?

      How bout letting the Govt truck drivers be able to service and change the oil on their trucks…vs having to drive 2/3 hrs to a “center” point, and then standing around on Govt time for hours until the truck is serviced, and then being paid to simply drive it back home again…..is that just the tip of the ice berg in inefficiency?

      Biggest item in the county budget is social services…..should then be the easiest to find cuts or problems of abuse….

    • http://sayanythingblog.com Rob

      I think we could probably go from city to city and find lots of areas to cut. But what we need is a long-term solution, not squabbling over current budget line items.

      The problem with the current approach to property taxes is that it obfuscates responsibility for spending at the local level. Locals have successfully managed to blame the legislature for property taxes, even though they levy the tax to pay for spending they control, and in return they’ve gotten a gravy train of money from the state allowing them to run up spending even further.

      If locals want local control, they should take local responsibility. I’d like to be rid of the property tax because I think it is a fundamentally problematic revenue source, but we aren’t going to see any real changes with property taxes until we start pointing the finger at the right people for the property taxes.

      If the spending driving property taxes is all appropriate, let the locals make that case to the taxpayers. Right now, that debate mostly isn’t happening.

      • SusanBeehler

        The blame is in both, the legislature is writing the laws which controls how property tax is administered and what the locals can collect. The state could say the locals can choose a revenue stream to fund services such as in a local income tax or sales tax vs a property tax or I would like the state to give back the sales tax to the jurisdiction in exchange for eliminating the property tax, but this is scary if the economy takes a turn and sales go down then the locals would have no choice but to cut spending. The state is collecting sales tax from all over our state and contributed to our state’s surplus, yet it may not be coming back to the communities in state aid at the same level as it is growing the state coffers.

        • joeb

          “The state is collecting sales tax from all over our state and
          contributed to our state’s surplus, yet it may not be coming back to the
          communities in state aid at the same level as it is growing the state
          coffers.”
          I live in Williams County. For the second time today, I find myself agreeing with you.

    • zipity

      B.S. My property taxes went up 50% in less than 5 years. And 3/4 of that is for the schools. I don’t think the kids are 50% smarter. Nor are the teachers getting 50% more salary. I’d bet a good sum that there is close to 50% more administrators and other personnel who have nothing to do with actually educating children.

    • SusanBeehler

      Property tax in bigger cities is only about 20% – 30% of the revenue they take in. In Mandan the revenue they take in from special assessments exceeds the property tax revenue.

  • guest

    Rob. There are hundreds of jurisdictions in nd that collect money from property tax if you add up schools, cities, parks, counties and townships. Ive heard minot pub school and fargo city talk about their needs. You talk about locals and agressive spending. Who else are you referring to and maybe those local majorities are in favor and dont feel the same way you and susan feel?

    • http://sayanythingblog.com Rob

      The problem is that we aren’t having a debate over local spending.

      It’s an absolute fact that North Dakotans are upset about property taxes. It’s also an absolute fact that local spending drives property taxes. Thus, if we want to fix property taxes, we have to stop blaming the legislature and start asking questions about local spending.

      • Yukon

        Lets be honest, schools account for over half your property taxes and 80% of school budgets are salaries. That’s why it is hard to cut school spending, between unions, administration and school boards, nobody will make the tough decisions. We need to find a new way of funding local governments and schools. Property taxes have been extremely high and unfair since the inception of property taxes. Property taxes should a flat rate not based on property value. Property taxes for home owners should not be more than $2500, we need to stop the madness and think outside the box.

        • awfulorv

          I read that, in Washington, D.C. $14,000 is spent per student, per year.

          Say a class is twenty pupils, it’s usually more, but just say twenty, thats $280,000.
          Let’s say a teacher is paid $80,000 oer year?
          Tell me, dear friends, WTF comes of the other $200,000?

          • Tim Hines

            Secretaries, counselors, transportation, cooks and food, janitors, utilities, supplies, extra curricular activities….It adds up faster than you would think, compared to just one teacher and 20 kids…..

          • kevindf

            Don’t forget the “urban planners” who rake in tax money hand over fist!

  • Jason

    The lion’s share of state “property tax relief” went to schools, which also utilize most of our property tax dollars. Cities, counties, etc. didn’t get much at all out of this deal. So we should see some reduction in property tax for school districts. If not, that’s the place to protest.

    • http://sayanythingblog.com Rob

      The legislature appropriated several hundred million in buy-downs in addition to the school levy buy-downs.

      So no, the counties and cities shouldn’t be ignored.

    • SusanBeehler

      I thought the cities or counties got a 12% buy down in mills and the schools got their funding. For me calling this property tax relief is a sham, because if it is relief the payer of the tax should feel the impact, and it is yet to be seen if we will. The locals will have to reduce the mills to feel the relief otherwise the legislature just grew the revenues for the local entities not a direct relief for the taxpayer.

  • kevindf

    They will just put the money in their pockets and call it a day!

  • SusanBeehler

    This Minnesota blogger does not like the “property tax relief” conversation either. http://propertytaxjusticemn.blogspot.com/

  • joeb

    Oh yeah. Relief. The assessment on my house went up by the amount of the mortgage in the last year, with no improvements. If the mill levy stays the same the taxes will go up by 50%. Paying rent to the government now that the house is paid off.

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