North Dakotans Should Expect a Property Tax Hike in 2018

“I guess it’s maybe time for a reality check here,” House Majority Leader Al Carlson (R-Fargo) said during a floor debate yesterday over SB2206.

That legislation deals with the state’s take over of county-level social services. The local governments have been agitating for that take over for some time arguing, correctly, that they amount to an unfunded mandate on local governments. The counties, after all, have little to do with setting policy on social services and yet they are obligated to levy a tax to pay for it.

But in that legislation is also a sunset for the state’s 12 percent buy downs of local property taxes, and it marks an end to a very stupid approach to property tax relief which began roughly a decade ago under former Governor John Hoeven.

Anyone who follows North Dakota politics knows that property taxes are a consistent source of agitation among voters. Under Hoeven lawmakers inserted the state into the problem, attempting to use state revenues to buy down local property taxes.

[mks_pullquote align=”right” width=”300″ size=”24″ bg_color=”#ffffff” txt_color=”#000000″]Think of the property tax issue as a pile of rocks. Lawmakers hid the rocks by throwing them into the deep pond of the state’s past revenue surpluses and pretending as though they went away. But now that waters in that pond are dramatically lower and everyone can see that the rocks are still with us.[/mks_pullquote]

It was a largely ineffective endeavor as policy since the reductions in property taxes it was supposed to inspire were spotty, at best. But as politics it was pretty successful. The spending driving the property tax hikes was hidden in the statewide budget surpluses while the politicians took credit for property tax relief.

Reality has a way of catching up with you.

Think of the property tax issue as a pile of rocks. Lawmakers hid the rocks by throwing them into the deep pond of the state’s past revenue surpluses and pretending as though they went away.

But now that waters in that pond are dramatically lower and everyone can see that the rocks are still with us.

The bill is due for years of chicanery. The state doesn’t have budget surpluses any more. After 2017 the 12 percent buy down of property taxes is going away, and in its place is only a state take over of local social service spending which is neither permanent nor as large as the buy down in dollar value.

“We want to get out of the property tax business, the state, and this is one of the ways to get us out,” Rep. Jason Dockter (R-Bismarck) said during the floor debate.

That’s the crux of the issue. The state has to get out of the property tax business. The state never should have entered the property tax business. Property taxes are a local issue. If your property taxes are too high you need to talk to your local elected leaders and look at your local budget.

Some, including myself, have been droning on about that for years, but the politicians liked sending out press releases about property tax release. Only when paying for the “property tax relief” became a mathematical impossibility did they embrace reality.

“You can kill these amendments, and you can go back to the original bill, but there’s not enough money to fund it,” Carlson said yesterday.

Exactly. The version of the bill the House passed yesterday, by a wide margin, is amended from the Senate version. That means the two chambers will have to reconcile their differences. But Carlson’s right. There is no money for the status quo.

That means property tax hikes are coming.

I don’t blame the lawmakers for passing this bill.  It’s the right thing to do, fixing a problem created by previous legislative sessions.

The lawmakers involved in those past sessions deserve blame for that, but going forward the proper venue for your property tax complaints should be local government.