When Is Spending Really A Tax Cut?
When politicians say it is, of course.
Today I addressed the NDGOP’s Chairman’s Lunch in Bismarck at the Radisson hotel. My talk was about the impact of new media on politics in North Dakota, but also speaking was Tax Commissioner Cory Fong who was there to sing the praises of the “tax relief” package proposed by Governor Hoeven and passed by the state legislature.
The package included $300 million of state-level funds going to the local governing entities that levy North Dakota’s property taxes in exchange for property taxes going down. Of course, as Commissioner Fong himself alluded to in his speech, that hasn’t always happened. Many local entities have increased property valuations to the point where property owners saw only a portion, or none at all, of this tax relief.
The question and answer period after Fong’s presentation was interesting. I asked how it is we can call this tax relief when really it amounts to more state-level spending? After all, this “tax relief” is an appropriation by the state legislature. One that must be continually re-appropriated in order for the tax relief to stay in place. What kind of tax relief requires legislative spending?
Fong’s only answer was that the legislature had set aside the funds to keep this “tax relief” in place.
Another attendee raised his hand and asked if it was smart for the state legislature to take responsibility for relief on a tax they don’t actually levy. After all, now that the legislature has taken this on, all of the North Dakotans who aren’t happy with their property tax bills aren’t going to turn to the local entities whose spending actually drives those property taxes. Now they’re going to go to the state legislature.
And the only tool the state legislature has to fix the problem? More spending. And what happens if the state ever doesn’t have the funds to keep spending on this tax relief?
Who knows.
Remember that these tax reliefs are central in Governor Hoeven’s brag list of accomplishments as governor. Something he’ll be waving around quite a bit as he runs for Senate. It’s worth remembering, as this Q&A with Fong so clearly illustrated, that it really wasn’t much of an accomplishment at all.
