Tom Dennis: North Dakota State Should Just Keep the Checks Coming

Apparently the cities and school districts will tell them when they’ve got enough money.
Grand Forks Herald Editorial writer Tom Dennis does a great job on the editorial page. I regret to say that he had a blog post today that was wrong in nearly every way possible.
Property taxes in the larger cities have been climbing at about twice the rate of inflation. The property tax payers are stretched to the breaking point. It looks like the state is going to come in and buy down everyone’s property taxes by ten percent. Along with that the state is likely to cap the increase in property taxes. Of course the locals want the money but they don’t want any strings attached. Unfortunately Tom Dennis is siding with the local governments:

The North Dakota Legislature seems likely to cap local governments’ ability to raise revenue through property taxes. But why are local governments’ property tax hikes an issue in the first place? Because the state Legislature has refused either to cede power to local governments or adequately pay for those governments’ services with state dollars, which come largely from income and sales — not property — taxes.

I’m really disappointed that Tom Dennis is blaming the state government for local property taxes going up. That’s just propaganda and he should know it.
Local property taxes are way up because (at least in Grand Forks) all the taxing entities have greatly increased their spending. In the larger cities we’ve seen property values grow much faster than the rate of inflation. The locals should have cut their tax rates in order to grow their spending only as fast as inflation. But with the money coming in they spent it. I pointed out in this post here that in Grand Forks the tax bills went 23% while property values went up 25%. Every entity (city, school, county and park board) grew their budgets by about the same amount. If the problem was the state wasn’t fufilling it’s obligation then we’d only see spending growth where there is such an obligation like school spending. But we are seeing all local entities increase their spending at the same rate.
I also pointed out in this post that since 1985 the state has increased school funding 10% in inflation adjusted dollars.
Finally the sky-high property tax bills are only seen in big cities where property values are climbing.
So that “it’s the states fault for not giving the locals enough money” argument just ain’t going to fly.
Tom Dennis also laments that the state hasn’t given the localities the ability to levy their own income taxes. That’s a terrible idea for two reasons. First of all the localities are going to use this as a tool to spend more money. The local entities have nearly all levied sales taxes and wonders of wonders nobody’s property tax bills have gone down. Why would we think that a local income tax would be any different? The other reason is that a local income tax would be nearly impossible to work with. What if someone lives in the city and works out of town? What if someone works in the city and lives out of town? How is anyone supposed to keep that straight?
Tom goes on:

But state lawmakers also want to cap any potential rise in property taxes, thereby robbing local elected officials — elected officials, accountable to voters, mind you — of flexibility and discretion in raising revenue.

I think that if the state is going to have to bail out the localities then they have to put some strings on the money. The locals have been irresponsible with their spending. What makes us think that they won’t raise spending 10% MORE just because of the state property tax buydown?
Dennis claims that a tax cap is going to cause services to erode. I don’t see it that way. Government spending should go up because of growth in the city and maybe with some inflationary increases. A well run city would attract more businesses and people and keep a person’s tax bill growing lower than inflation.