Property tax frustrations

House committee still seeking solution

BISMARCK – A legislative committee agreed a solution to rising property taxes is needed but determined on Tuesday that a Minot legislator’s bill isn’t it.

Rep. Larry Bellew, R-Minot, is prime sponsor of House Bill 1461, which received a 9-5 “do not pass” recommendation from the House Finance and Taxation Committee. The bill would restrict taxing entities from increasing levies by more than 5% without voter approval. A similar bill died 73-20 on the House floor in the 2021 session.

Committee members voiced their frustration in not being able to find a solution to rising property taxes, despite seeing bills on the issue every session.

Rep. Mike Motschenbacher, R-Bismarck, said political subdivisions have an obligation to solve the property-tax problem, which was the main concern of constituents heard by most legislators during their campaigns.

“It’s the number one thing that is on their minds, and they’re losing their minds because of this. We owe it to them to do some research and see if there is a solution. I’ve been looking at a solution for 15 years and I can’t come up with one,” he said.

Bellew offered HB 1461 as “one simple method by which taxpayers are protected from excessive increases in their property tax burden.”

“Some people view property tax limitations as a sensible constraint on the growth of local government or as a fail safe way to avoid pricing people out of their homes. The cap on revenue that would restrict the amount of money that a local government can raise would begin to stem the uncontrolled property tax growth,” Bellew said.

His bill was opposed by organizations representing political subdivisions. Opponents testified the bill restricts financial flexibility and prevents local governments from keeping up with inflation. They stated the budget process has too short a window for scheduling an election on a proposed tax levy.

The committee heard about the bill’s conflicts with the existing funding formula for schools, which could lead to rapidly growing districts paying a lower local cost-share than provided in the formula, requiring the state to make up the difference.

“Currently, schools are the only political subs that are capped already,” said Aimee Copas, executive director for the North Dakota Council of Educational Leaders. “It’s a very intricate balance between the finance formula and the taxation formula.”

David Lakefield, City of Minot finance director, said capping property-tax levies would have a number of impacts for Minot, including raising interest rates on borrowing and making it difficult to address resident-identified priorities without turning to other revenue sources, such as special assessments.

He added the hospital building under construction in Minot is taxable until it comes on line. When that happens this year, it will mean a tax decrease that HB 1461 won’t allow the city to recover from its overall tax base next year, he said.

“So that will severely limit our ability to even keep up with inflation for the 2024 budget,” he said. 

Rep. Jason Dockter, R-Bismarck, a co-sponsor of HB 1461, said the committee needs proposed solutions from political subdivisions to produce workable legislation.

“We’re trying to get solutions, and we never get any feedback. All we get is ‘we don’t like it because we can’t do this, this and this.’ But we never get any options,” he said.

Committee Chairman Rep. Craig Headland, R-Montpelier, said the responsibility for restraining property taxes might lie with taxpayers at the ballot box and citizens on the local level. He suggested another previously heard tax bill related to tax transparency might help.

“I think that’s a better route to go than limiting the ability to take care of the services that local residents ask for,” he said.


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