Local Control Shouldn't Mean A Blank Check For Local Governments

Since 2007, North Dakota’s state government has been trying to solve a local government property tax problem. High property taxes are driving public dissatisfaction, but what’s driving high property taxes is local spending. Yet, local government officials have been very effective redirecting the angst over property taxes to state leaders.

And, unfortunately, Governor John Hoeven and other state leaders decided to accept responsibility for the issue. First we got property tax relief tied to an income tax credit out of the 2007 legislative session, but after that proved confusing and inefficient the legislature began just appropriating money to local governments in exchange for lowered mill levies. Those appropriations have continued, and gotten larger, to the point where local governments have now gobbled up $752 million in state “property tax relief” appropriations, all while the bill property owners pay continues to rise.

Now, as Governor Dalrymple prepares shower even more state tax dollars down on local govenrment (even Dalrymple himself is admitting that it’s not really property tax relief these days), legislators are considering limits on local property taxes.

Last week, before the crossover break, the North Dakota House passed bills to cap property tax mills, and total property tax dollar amount levies, at no more than 3% of the previous year’s amount. The legislation has provisions to allow those caps to be worked around in certain circumstances, but already some are crying foul.

The left-wing Grand Forks Herald, with a sudden appreciation for federalism, gripes that the caps infringe upon local control:

Suppose the federal government started taking an interest in North Dakota’s state taxes. Suppose the feds said that from now on, North Dakota must abide by tight new limits from Washington on state income, sales and oil-extraction taxes.

What would the reaction likely be in Bismarck?

That howls of dismay about federal arrogance and interference would lift the Capitol skyscraper a full foot.

Who is Washington to tell us what to do … Why do they think they know better than we do what North Dakotans want … How dare they basically tell us that we’re not capable of governing ourselves.

Right?

So, why are North Dakota legislators talking about local taxes in the same arrogant and interfering way?

“City, parks and school officials from both Fargo and West Fargo oppose two state House bills that would put a 3 percent limit on the total dollar increases in property taxes those entities could collect from one year to the next,” Forum News Service reported this week.

And the officials are right to be opposed, because the bills represent meddling of the most self-interested sort.

Of course, what the Herald leaves out is the fact that local governments don’t mind when state meddling comes in the form of property tax buy downs. And the allusion to federalism isn’t an apt comparison at all. States are sovereign (or are supposed to be, anyway) in our federalist republic, but our local governments aren’t. They are political subdivisions of the state. It may be good practice in general to allow local governments a certain degree of autonomy, but let’s not pretend the state is a conglomeration of independent city-states. Because that’s not the reality, as much as some local leaders may want it to be.

It’s frustrating that we’ve allowed the “local control” argument to mean a blank check for local governments. The locals want the state to continue bailing them out of their property tax mess, but they don’t want the state to tie any strings to the funds they get. In short, locals want their cake and they want to eat it too.

The best thing for the state to do on the issue of property tax relief would be nothing. Don’t pass any caps on local property taxes, but also stop the property tax bailouts and let locals be accountable to the voters for the taxes they levy, and the dollars they spend. The funds Governor Dalrymple has earmarked for “property tax relief” could best be used in lowering taxes the state actually levies, be it the income tax or the sales tax.