The largest political coalition in the state’s history has formed to oppose Constitutional Measure 2, which would abolish property taxes in North Dakota.
The “Keep it Local ND” coalition said at the statewide news conferences the first week of February that the measure is “reckless and poorly crafted.” The coalition is comprised of business groups, non-profits and other associations representing an estimated 300,000 North Dakotans.
The group’s members believe abolishing property taxes would sacrifice local control, shift the tax burden unfairly, and actually cost North Dakota more than it would save. Plus, as a Constitutional measure, it would create an unbalanced and unfair tax policy for the state that would be extremely difficult to change in the future.
State voters will decide on Measure 2 in the June 2012 Primary Election. “Keep It Local ND” offers the following answers to basic questions:
Q: What does Measure 2 do?
A: Measure 2 amends the Constitution of North Dakota, abolishing all authority to raise taxes that are based on the valuation of property. Currently, property taxes are levied by local governments (county, city, park district, school district, etc.) to fund local services.
Q: Without property taxes, where would local governments get their funding?
A: Measure 2 requires the state legislature to fund local government, shifting control from locally elected officials to state legislators. Local government would still decide how money is spent, but only after legislators have decided how much to allocate to each of over 2,100 local government entities. Citizens could vote to build a new school or park, but legislators would decide whether it should be funded.
Q: I’ve heard Measure 2 would fully fund local governments. Is that true?
A: The language of the measure says the legislature must “fully and properly fund all legally imposed obligations” of local government. It offers no definition of “legally imposed obligations,” so it would be up to the legislature to try to decide what that means, and up to the courts to settle any disputes. Is police protection a legal obligation? If so, how many officers? How many cars? Conversely, the idea that Measure 2 would give local governments an open checkbook to be paid by the state is equally irresponsible and dangerous.
Q: How much is raised through property taxes now, and how would it be replaced?
A: According to the North Dakota Tax Department, over $850 million was raised in property taxes for 2012. In addition, over $500 million is raised annually in what is known as “payment in lieu of taxes,” or PILT. To raise that amount would require a doubling of income tax or a doubling of the sales tax rate or a combination of those and other taxes. The resulting tax increases, no matter what the formula, would likely be the largest tax increase in state history.
Q: Why not use all that oil money?
A: The first answer to that question is that we can’t control most of the factors that lead to oil production. History has clearly shown that oil and gas are at best a fluctuating income source, and at worst can drop to zero virtually overnight. The second answer is that it is not sound tax policy to place the burden of local government funding for the entire state on just one industry in just one portion of the state.
Q. How many other states have eliminated property taxes?
A: Zero. Every state has property taxes for funding local government.
Q: What about out-of-state landowners?
A:. They would get a free ride. “Big Box” stores and non-residents who own land solely for hunting would not have to pay a dime for the infrastructure that supports. Recent analysis shows that non-resident property owners pay at least $126.8 million. North Dakotans would have to make up for this through their other taxes.
For more information, see the “Keep It Local ND” website at: www.keepitlocalnd.com.