Measure 2: A Funding Nightmare for North Dakota

Measure #2 is appearing on North Dakota's June 2012 ballot.  The measure states that it would eliminate property taxes, poll taxes and acreage taxes effective January 1, 2012.  At first glance, it sounds great - we won't have to pay property taxes anymore!

Let me say, that is about as rosy as it gets...if you don't like paying property taxes, I really hope you like paying income taxes and state sales taxes.  In addition, your bank will probably pass on some new fees to you, as part of the replacement funding for this measure comes from financial institution taxes, oil and gas production and extraction taxes, tobacco taxes, lottery revenues and "other" state resources.  The "other" state resources probably scare me the most. I wonder what state resources they are referring to. Ultimately, the vagueness of the entire measure is astonishing.

First, the measure does not provide a formula for replacing the what property taxes pay for - namely 50% of our schools' funding, park districts, water districts, irrigation districts, fire protection districts, soil conservation districts and "other" political subdivisions.  It leads me to believe that the writers of this measure are so unaware of what property taxes actually pay for that they had to include the word "other". One big "other" they left out is police protection.  (But hey, who needs that?)
  
Secondly, your county commission and city council would have no control over their own budgets.  The budgets would be determined “according to a formula devised by the legislative assembly.”  (I should also mention the wording states something along the lines that the political subdivisions can decide locally how to spend their allocation from the legislature.  I'm sure the proponents will use that wording as their defense for those who say it takes away local control). Glaringly obvious points – cities and counties would be at the mercy of a legislature that meets every other year. Did I also mention, the measure has NO FORMULA for funding nor any proposed formula?  The Legislature will just have to "wing it" when they convene.

School funding is guaranteed in the measure, however, there are two flaws – 1) No growth factor is included in the measure. 2)  It does not mandate that the Legislative Assembly maintain the same levels of funding to school districts that it maintained in 2011.  Basically, the legislature could decide to cut state funding every year for our schools if they wanted to.

Measure 2 would DOUBLE every city and county’s debt limit. Currently, a political subdivision’s debt is not to exceed 5% of the assessed value of taxable property. In the fine editing skills the measure’s authors have changed “assessed value” (since there would be no property tax) to “market value.” FYI - Market value is approximately twice the amount of assessed value and PERSONAL property would become part of the limit because “taxable property” is changed to “property” with no exclusion of personal property.  How do you feel about a county assessor coming into your home and assessing your personal belongings, not to mention the additional time and pay that would be needed?

Finally, the biggest red flag to me is that a measure that was basically written on two pages of paper has generated a ten page “analysis” of issues the measure raises by the Property Tax Measure Review Committee. 

I didn’t cover all of the flaws in Measure 2, these are just a few points that jumped out at me.  The North Dakota Association of Counties put together a fine list of resources on Measure 2.  Take a look at their website - http://www.ndaco.org/?id=497.

Whether you live a big city or have a farm with a dirt road, Measure 2 will have an impact on everyone and I'm not convinced it will be positive.  One thing is certain...it will be a funding nightmare for North Dakota.  

Source: Property Tax Elimination Initiated Measure – Analysis of Issues Raised by the Property Tax Measure Review Committee, prepared by the North Dakota Legislative Council Staff, November 2011.

Kristi Hardy
Director, Marketing Services
Park Co. Realtors
701.237.5031
kristihardy@parkcompany.com