Supporters of a ballot measure that would eliminate property taxes based on assessed value submitted more than 40,000 signatures to the North Dakota secretary of state's office on Friday.
Advocates say the measure is a response to legislative inaction in the face of rising property tax rates, but opponents are worried about the potential impact to infrastructure given what it would ask of the state Legislature, as well as local governments.
The measure would prohibit governments from levying property taxes against residents based on property valuations and require the state Legislature to fill that funding gap at the 2024 level. Legislative Council, the Legislature's research arm, recently estimated that the state would have to foot the bill for more than $1.3 billion per year, though some existing property tax relief would go toward that figure. And local political subdivisions would have to find other avenues to fund budgetary increases.
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Sponsoring committee chair Rick Becker told reporters that supporters submitted 40,759 signatures -- thousands more than the 31,164 validated signatures required to make it on the ballot in November. The state now has to verify the signatures by Aug. 2, but would have to throw out large quantities of signatures for the measure not to qualify.
Becker, a former Bismarck Republican state representative, said the measure would allow residents to better understand how they are being taxed, decrying the existing process. He also said the state has "more than enough money" to bridge the gap for local governments, indicating that legislators also plan to introduce some bills that would reduce the amount of money replaced annually to around $1 billion. Legislative Council estimated that the replacement cost of the measure for the 2025-27 biennium would be equal to about 40% of the state's general fund for the 2023-25 biennium.
Becker said he isn't worried about the process of funding budgetary increases because it's a "tiny amount of revenue relative to their total budget."
"We're talking 5% of their total budget, maybe, is what they're going to have to raise because the state is picking up all of the rest," he said. Becker also emphasized that the measure would allow local governments to experiment with the best sources of revenue increases, naming utility bills and municipal operations fees as potential routes to do so.
But many in the state are concerned about the impact of the measure, arguing that it would make local governments more dependent on the state. Keep It Local, a coalition of more than 60 groups from a variety of industries, launched last week in staunch opposition of the measure. Multiple chambers of commerce, public safety organizations, agriculture and energy advocates, and education associations are among the coalition's members.
Chair Chad Oban told the Tribune he's concerned that local governments will need to come to Bismarck and "sing for their supper" to get funding without property taxes as a revenue mechanism. Becker disputed that claim, saying the built-in allocation based on 2024 revenues eliminates the need for discussion with the Legislature on municipal budgets. But Oban said that some options for other revenue sources don't exist in all parts of the state, which would present challenges for some governments.
"Places like rural communities, (Becker) talks about just raising it by 2%," Oban said. "They don't have a sales tax base -- they don't have ways to increase this additional revenue as things stand now."