North Dakota’s Property Tax Vote: Future Impact on Finances and Services?

North Dakota's Property Tax Vote: Future Impact on Finances and Services?

At a Glance

  • North Dakota’s Initiated Measure 4 aims to eliminate property taxes based on assessed value.
  • The measure could cost the state $3.15 billion for the 2025-2027 biennium.
  • Supporters argue property tax is immoral, while opponents fear harm to local economies and services.
  • Over 100 organizations oppose the measure, forming the Keep It Local coalition.
  • If passed, the measure would take effect on January 1, 2025.

A Constitutional Shift in Taxation

North Dakota voters are gearing up for a pivotal decision that could reshape the state’s financial landscape. Measure 4, slated for the November 5, 2024 ballot, proposes a constitutional amendment to eliminate property taxes based on assessed value, except for bonded indebtedness. This radical shift in taxation policy has ignited a fierce debate across the state, pitting property rights advocates against defenders of local government funding.

The measure’s implications are far-reaching. A “yes” vote would prohibit state and local governments from levying taxes on the assessed value of real or personal property. It would also limit political subdivision debt to 2.5% of real property value, with potential increases for cities and school districts through voter approval. The state would be required to replace property tax revenue for local governments, minus taxes for bonds, as of 2024.

The Price of Property Tax Elimination

The financial implications of this measure are staggering. According to updated cost estimates, eliminating property taxes would cost the state $3.15 billion for the 2025-2027 biennium. This figure represents a significant increase from previous projections, raising concerns about the state’s ability to absorb such a massive financial hit.

State Senate Majority Leader David Hogue said, “We’ve been working off of a figure of $2.6 billion, and so this is approximately another half a billion dollars that we need to come up with, realistically. We’re not in a good position to wait around until after November, after the election, to figure out if this passes. We have to start planning now.”

However, Rick Becker, chair of the committee sponsoring the measure, argues that the cost is inflated and manageable within the state’s budget. He points to North Dakota’s strong financial position, particularly from oil and sales taxes, as evidence that the state can handle this seismic shift in its tax structure.

The Battle Lines Are Drawn

The debate over Measure 4 has sharply divided North Dakota. Supporters argue that property tax is immoral and burdensome, viewing it as an infringement on private property rights. They see this measure as a chance to provide significant relief to property owners and transform the state’s fiscal landscape.

Initiative sponsor Rick Becker is one who thinks the state property tax is fundamentally wrong.

“Many people, including myself, believe that amongst the taxes, property tax is a fairly immoral tax. Private property is the foundation of a free society,” Becker said. “The ability for the government to take away something that you should rightfully own is improper. I’m shocked at how much property tax is going up this year. It’s just crazy to me. Let’s call it wasteful unnecessary spending. We have a chance to take that away from state legislators and convert it to actual tax relief for citizens by eliminating the property tax.”

On the other side, a formidable opposition has formed. Over 100 organizations have joined the Keep It Local coalition, arguing that the measure would harm local economies and essential services. They fear that eliminating property taxes could lead to increased income and sales taxes or new fees, potentially harming the state’s economic competitiveness.

The Ripple Effects

The implications of Measure 4 extend far beyond simple tax policy. Property taxes currently fund essential local government services such as sewers, roads, and schools. Eliminating this revenue source could strip local governments of their primary funding mechanism, potentially leading to significant cuts in services or a shift towards more harmful taxes.

Critics also point out that the measure moves away from the benefit principle of taxation, shifts local revenue responsibility to the state, and creates a structural fiscal deficit of nearly $1.3 billion annually. These changes could fundamentally alter the relationship between state and local governments, potentially centralizing power in ways that many North Dakotans might find concerning.

A Pivotal Moment for North Dakota

As November 5, 2024, approaches, North Dakota stands at a crossroads. The vote on Measure 4 represents more than just a decision on property taxes; it’s a referendum on the state’s financial future, the balance of power between state and local governments, and the very nature of property rights in the state.

While past outcomes reflect conservative voter tendencies, the current economic and political shifts could significantly shape the result of this pivotal decision. As the debate rages on, one thing is clear: the outcome of this vote will have far-reaching consequences for every North Dakotan.

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