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Dale Wetzel, Associated Press Writer, Published February 02 2011

Property tax hike ceiling sought in North Dakota

BISMARCK – Limiting the growth of local governments’ property tax revenues would help older North Dakotans avoid being pushed to sell their homes because they could no longer afford the tax bills, legislators and agriculture lobbyists said Tuesday.

“My approach is simply this: You’ve got to slow the growth of spending by all the taxing authorities and make them live within a budget that is reasonable,” Rep. Jim Kasper, R-Fargo, said during a North Dakota House Finance and Taxation Committee hearing.

Kasper’s bill would cap property tax revenue growth at 3 percent annually unless the affected local governing board got voters’ permission to collect up to 5 percent more.

It is structured to ensure that local governments do not reap a windfall by applying constant tax rates to rising property values, Kasper said. As land becomes more valuable, he said, the bill would require local governments to trim their property tax rates to stay underneath his proposed cap.

The legislation would exempt property tax levies that are assessed to repay debt; to finance buildings or building improvements; to make large equipment purchases, such as road graders and trash trucks; and to pay for fire and police protection and emergency services.

Proposals to restrict property taxes are a staple of the North Dakota Legislature, and Kasper’s legislation is one of several aimed at limiting their growth. Property tax measures that Kasper introduced during the 2007 and 2009 legislative sessions were defeated.

Lobbying pressure from local governments has derailed similar bills, and representatives of North Dakota’s cities and counties opposed Kasper’s legislation Tuesday. The committee delayed any action on the measure, which will be forwarded to the full House for a vote.

Connie Sprynczynatyk, director of the North Dakota League of Cities, said most property tax collections in the state’s larger cities are spent on police and fire protection and public works, including snow removal and street repairs.

Terry Traynor, assistant director of the North Dakota Association of Counties, said county officials themselves were concerned about rising property taxes. However, last year’s elections resulted in the defeat of only three incumbent county commissioners, out of more than 200 commissioner positions on the ballot, Traynor said.

“There is certainly a feeling, and a feeling among our members, that property taxes are a problem,” Traynor said. “But it isn’t being reflected at the ballot box, and to me, that’s the most sensitive place it should be reflected.”

Kasper’s legislation would limit increases in the tax bill for any piece of property to 3 percent each year, unless 60 percent of the local government’s voters agreed to lift the limit to 5 percent. Any increased tax authority granted at the ballot box would last for five years.

Sandy Clark, a spokeswoman for the North Dakota Farm Bureau, and Julie Ellingson, director of the North Dakota Stockmen’s Association, supported the proposal, although Clark said the 3 percent growth limit would be better applied to a local government’s annual property tax collections than to individual parcels of land.

“That would allow some flexibility within the taxing district,” she said. “Granted, that would not limit everyone’s tax increase to 3 percent, but it would still limit growth of government.”

The Legislature’s most popular property tax initiative in recent years has been its decision to provide subsidies to local school districts for use in trimming their tax rates.

Gov. Jack Dalrymple’s recommended two-year budget includes more than $340 million in school property tax subsidies, and Kasper said he wondered whether the state treasury could maintain the program.

“We have done nothing other than getting the state into the business of paying property tax,” Kasper said. “We’re going to come to a point in time, if we continue on that train, we’re going to be a billion dollars into paying property taxes.”

The bill is HB1293.

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