Ralph Kingsbury Column: North Dakota Property Taxes Don't Work

Some have asked me why I am so opposed to property taxes. Several problems come to mind.

One is that I have never seen any other system where there is so significant an unfair assessment among the different properties, and even the same class of properties. As to within in the same class, in North Dakota say two brothers farm together. They build two identical homes, one in Cooperstown, the other at the farmstead five miles out of town that you get to by driving on two miles of blacktop county road and three miles on poorly graveled and maintained township road. In the same county, they are also in the same school district which provides free bus service to the rural students. What do you value each house at? Is that “country estate” worth more or less than the brothers “urban” Cooperstown living, or is it the other way around?

In fact, this has been such a contentious issue that to this day farmers pay nothing of value in property taxes on their home.

After thinking about that are you willing to call the property tax system a fair and workable leg of what those who want property taxes call the three legged stool? I think the stool leans a little.

We can fix that. Just tax the farmer. Probably should, but what is the difference in value between those two homes we described?

But then, there is the next problem. A plant comes to town promising many many manufacturing jobs. The local job development authority recommends a property tax exemption. They have to. Every other county that wants the jobs is offering that, and really it isn’t costing anything because they aren’t getting any of that money now. That’s what they always tell us.

Once any property is taxed how quickly do buildings lose their value? That depends on how it was built, how it is used, and how it is maintained. Of course if it is well built, used with care and maintained as it should be, well let’s tax that company for all the good value they have created and maintained.

Then there is the problem of assessment between or among the different classes. How do you assess commercial property relative to personal (housing) property? How much value do you put on recreational property versus that personal home in Fargo, or Cooperstown? A piece of hunting land in southwestern North Dakota must have a lot of value if it is an “extraordinary places” that cannot have an[RK1] oil well on it. Certainly, too, that 100 feet of shore line on Devils Lake in a state with so little shore line.

We all know that income receives several breaks and that the rich people have less of their income subject to income taxes or to sales taxes, but when it comes to their property, the better stewards they are the more we will tax them.

Today in the oil patch we are seeing the best example of the property tax deficiencies. I am talking about how short county, city, township, and all levels of local government are when it comes to building infrastructure needed right now with wealth that has not yet been created. We think the wealth is there. In fact we can be pretty confident there is enough overall, but in fact a particular area could be short.

Take Slope county and the Tyler formation. Apparently not one company is still drilling there. Not enough oil.

The fact that the last session of the legislature provided county and local governments with nearly two and a quarter billion dollars of oil revenue to pay for projects that should have been paid with property taxes demonstrates the deficiency of the system. Today many of those officials are saying they are still very short of money. The state didn’t give them enough. I make no judgment on that here. My point is this too demonstrates the problem. Are these officials holding up the rest of the state, or are they dealing with a real problem?

Property taxes. I think the three legged stool has leaned so far that it has fallen over.