Published January 26 2013
Property tax relief proposals run gamutBISMARCK – Put limits on local spending.
Impose caps on property value increases.
Give schools more money to lower their tax levies.
Exempt the first $100,000 in home value from taxes.
And the list goes on.
Ideas for providing property tax relief abound in Bismarck this session. Tax Commissioner Cory Fong joked recently that in the Legislature, property tax bills are like bellybuttons: Every lawmaker has one.
But no consensus exists yet between Democrats and Republicans – or within the GOP majority – on whose plan is best.
Monday is the deadline for senators to introduce bills. Last Monday was the deadline for House members, and more than a dozen bills have been filed related to property tax relief and property assessments.
Sen. Dwight Cook, R-Mandan, who chairs the Senate Finance and Taxation Committee, predicts that, barring an economic downturn before the end of the session, the Legislature will approve more than $1 billion in tax relief.
“I can’t tell you how it’s going to be delivered,” he said.
Proposals to put caps on property tax rates set by cities, counties and other political subdivisions and to limit increases in property valuations set by local assessors are expected to receive rigorous debate.
“There is more talk about that than any session in the past,” Cook said.
It’s fed by criticism that while the current mill levy reduction grant program that’s been in place since 2009 has reduced school district levies, cities and counties have collected more property taxes, largely due to rising property values.
Cook’s counterpart in the House, Rep. Wes Belter, R-Fargo, said he expects the House tax committee to consider several bills that would impose limits on local spending or taxable valuation increases. One example is House Bill 1239, which would limit taxable valuation increases to 3 percent from year to year.
Lawmakers have rejected cap proposals in past sessions, “but I do think the mood of the Legislature has changed,” Belter said.
“There seems to be a growing interest amongst legislators to possibly do some type of capping of city and county expenditures, but still leaving the cities and counties with the option of, if they want more money, that they go to their local voters for that,” he said.
Fong said it would be “a bad idea” to artificially cap valuations rather than letting the market dictate values. He and Connie Sprynczynatyk, executive director of the North Dakota League of Cities, pointed to the budget problems that have plagued local governments in California since the approval of Proposition 13, which limited the state’s property tax to 1 percent of a property’s full cash value.
Sprynczynatyk said overall mill levies were reduced in nine of North Dakota’s 13 largest cities last year, and she suggested local officials are better suited to respond to local needs than a state Legislature that meets for 80 days in Bismarck once every two years.
“That’s the problem with caps. You can’t tailor a local response to a local condition,” she said.
Cook and House Majority Leader Al Carlson said lawmakers also will take a hard look at how property is being assessed.
“We’ve got over 1,000 assessors in the state. They’re not all doing it the same,” Cook said.
The North Dakota Policy Council is among those who want lawmakers to impose caps on property values or require local governments to cut their mill levies in proportion to rising taxable valuations.
“Who are the ones evaluating the houses? The assessors. Who do the assessors work for? The government. So what are they going to do? They’re going to put as high of a value on a house as they can,” said Zack Tiggelaar, the council’s executive director.
West Fargo City Assessor Wanda Wilcox said assessors are required to set assessed values within 90 to 100 percent of market value. If they set it higher or lower, the state Board of Equalization can step in and change it.
“We’re just doing our jobs” in trying to set fair values for properties, she said. “We’re typically the scapegoat.”
If there are differences in how assessors arrive at values, “it has more to do with the tools” they’re given, Wilcox said, adding some small taxing entities don’t have the same software as bigger ones.
Democratic and GOP lawmakers interviewed for this story agreed that the mill levy reduction grant program will likely continue in some form. Gov. Jack Dalrymple has proposed expanding the buydown of school district levies from 75 mills to 135 mills and making it part of the permanent education funding formula.
Senate Minority Leader Mac Schneider, D-Grand Forks, said he believes the program is necessary but not sufficient “if we really want people to feel a tangible cut in their property taxes.”
Democrats are proposing that homeowners receive a property tax exemption on the first $100,000 of the home’s value. The relief would extend to farmers, and renters also would be eligible for a credit, said Sen. Jim Dotzenrod, D-Wyndmere, who sits on the taxation committee.
Dotzenrod said the exemption would not exceed 80 percent of the home’s value, so no homeowner would get a free ride on property taxes. But it would fall disproportionately to those on the lower end of the economic scale, “which we think is good,” he said.
“It makes sense for us … to try to provide that tax relief more tilted toward those that are having a tougher time,” he said.
Schneider said he believes proposals by Republicans to cut or eliminate income taxes and reduce corporate income taxes “really miss the mark.
“The taxes that people want cut are property taxes, and that’s where our focus is going to be,” he said.
Readers can reach Forum reporter Mike Nowatzki at (701) 241-5528