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Dale Wetzel, Associated Press, Published January 11 2011

North Dakota school property tax subsidy gets support

BISMARCK – An initiative that provides North Dakota’s school districts $340 million in property tax subsidies over two years is likely to be renewed, lawmakers said Monday, although a critic believes the program needs to be coupled with tax changes.

Dustin Gawrylow, director of the North Dakota Taxpayers Association, said other local governments have taken advantage of the decline in schools’ property tax rates to increase their own.

At a hearing of the North Dakota House Finance and Taxation Committee, Gawrylow said local governing boards should be required to acknowledge when they collect more tax revenues by applying the same property tax rates to rising values. The rates should be trimmed instead to discourage spending growth, he said.

“State-funded tax relief, without reform, is nothing more than a bailout for local government,” Gawrylow said.

The legislation provides more than $340 million over two years for local schools, which they are required to use to lower property tax rates.

Gov. Jack Dalrymple’s budget proposal to the 2011 Legislature includes $686.5 million to subsidize school property tax rates for the 2011-13 and 2013-15 budget periods.

Mitch Carlson, superintendent of the LaMoure school district, and Brandt Dick, superintendent of schools for Hazelton-Moffit-Braddock, said the property tax subsidy program’s rules penalized districts whose tax rates were below a state property tax ceiling when the program began.

As a result, Carlson and Dick said, their districts received less state aid to reach a lower property tax threshold and have a maximum property tax rate that is lower than other districts’. Voter approval would be required to raise it.

“Our (maximum property tax rate) has shrunk dramatically, without any extra financial aid from the state,” Carlson said. This leaves the district less able to replace its school buses and undertake other programs, he said.

The Finance and Taxation Committee will make a recommendation to the full House later about whether it should approve the legislation.

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