Legislators propose property-tax relief
Legislators today announced a proposal to reduce property taxes by roughly 25% statewide. The proposal, which will be put forward as a bill next legislative session, has the state buying down mills from 60 mills to 30 mills using the same mechanism as when the state re-did the K-12 formula in 2013, resulting in lower property taxes.
The estimated increase in education costs being assumed by the state for the 2023-25 biennium would be around $340.2 million, with the Legacy Fund being the main funding source. The bill would only apply to the school funding portion of the property tax, not cities, counties or parks.
“The state is constitutionally obligated to provide an education for all North Dakota students, the education portion of one’s tax bill is the only part of property taxes that the state can have an influence on. The state would now be paying 85% of education funding versus the 70% that it’s currently doing,” said bill co-sponsor Rep. Mike Nathe, R-Bismarck.
The proposal freezes property valuations for two years, thus helping to slow down any future increases that impact property taxes and would provide a boost for N.D. business community at a time when the national economy is uncertain.
“This bill would help all property owners, residential and commercial, but especially the seniors and middle- to lower-income residents who may not pay income tax, but often do pay property taxes,” said bill co-sponsor Sen. Don Schaible, R-Mott.
To account for the increased cost of education being assumed by the state, the bill provides a corresponding reduction in the amount a school district may levy for the costs of education. The bill replaces a school district’s 70-mill general fund levy authority with levy authority equal to the amount generated by 30 mills on a school district’s 2022 taxable valuation and a levy of 10 mills on the school district’s current taxable valuation. However, it does not modify the amount a school district may levy for purposes other than general fund purposes.
The bill also requires all taxing districts to express levy amounts in terms of dollars rather than mills when communicating with the public and requires the taxpayer’s property-tax statement to include the additional legislatively provided tax relief.
“This proposal really tries to address the concerns we’ve been hearing from the public regarding property taxes. Changing from mills to dollars provides transparency and clarity for the public, promotes baseline budgeting and prevents any mill formula shell games,” added Schaible.
The 68th Legislative Assembly will convene Jan. 3.