
Herald graphic
We’ll leave the full details, debates and final maneuvering to the 141 members of the Legislature. But out of the gate, Gov. Kelly Armstrong is showing praiseworthy leadership as he lays out plans for real property tax reform and relief for North Dakota residents.
Armstrong, who last month was sworn in as governor, spoke about property tax relief well before the November election. In September, he said property taxes were the state’s “No. 1 issue” and that changes must come from elected leaders, rather than through initiated statewide measures.
“We have to figure out how to do this and we have to figure out how to do it structurally,” he said.
On Tuesday, during his first State of the State address, he backed up that pre-election talk with a promising plan. He dedicated seven minutes of his roughly 31-minute speech — not counting a few minutes of personal anecdotes that served as a prelude — to an expansive property tax relief proposal, one he thinks is “responsible, achievable and durable.”
After outlining the plan, he said, “It’s the single most impactful thing we can do for our citizens this legislative session.”
And then this: “Let’s get it done.”
Armstrong’s interest in property tax relief matches that of a number of members of the Legislature, several of whom before the session said reform must be among lawmakers’ top goals this year.
Among the bullet points, his proposal includes:
- Putting a 3% annual cap on local-level property tax budgets.
- Using $310 million in general fund money to double the primary residential credit amount from $500 to $1,000 per year.
- Creating a primary residence classification, so “this relief will become automatic and not require homeowners to file for a credit,” he said.
- Using a dedicated stream of earnings from the Legacy Fund — North Dakota’s growing savings account that is derived from oil and gas extraction taxes — to provide additional funds to the primary residence credit. He said the stream will grow as the Legacy Fund grows, giving all homeowners “a direct stake in the overall success of the Legacy Fund.”
The result, the governor believes, will be that “the total combined primary residence relief will be $1,550 per year for the next biennium and at least $2,000 per year in the following biennium. Combined with the 3% cap, the Legislature will deliver significant relief that will grow exponentially faster than your property tax bill.”
Also in the plan: 100% of the primary residence property tax credits eventually would be covered by the Legacy Fund and nothing would come from the general fund, ensuring “we don’t saddle future legislatures with having to fund this tax relief.”
Ultimately, Armstrong said, property taxes could conceivably be eliminated for “an entire class of homeowners” who use both the new primary residence tax credit with an existing Homestead Tax credit. If the plan passes, many homeowners will be on a “path to zero within the next decade,” he said.
It is a lot of government involvement, and some local-level taxing entities might not be excited about the 3% cap proposal. But, as Armstrong said, “like it or not, the state is involved in property taxes and to be honest it hasn’t worked very well.” It has led North Dakotans to be “as frustrated as they’ve ever been,” he added.
Mark Jendrysik, a political science professor at UND, told WDAY that fiddling with the Legacy Fund comes with risk. Further, he said, it could lead to “serious micromanaging by the Legislature over local governments.”
Armstrong predicts the plan is resistant to dangerous commodity price swings, saying it works with “$55 oil and $6 a bushel for soybeans.” And the result, he believes, is “homeowners will see a significant, immediate impact.”
Certainly, there will be critiques, concerns, tweaks and compromises in the coming weeks. That’s how governing works. Nonetheless, this is a big step toward property tax reform — which to many is more important than simple relief — and our hope is that lawmakers jump on board and push it through. Armstrong, especially, is hoping for expediency.
“Make this property tax plan one of the first pieces of legislation you send to my desk, because it will affect every other aspect of our budget,” he urged lawmakers.
Whatever final form this proposal takes, it’s a great start for North Dakota’s new governor.
Herald editorials are written under the byline “Herald editorial board,” since they sometimes include the thoughts, opinions or written input of multiple authors. Editorials generally reflect the opinion of a newspaper’s publisher.
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