North Dakota voters are facing a significant decision this fall regarding property taxes and state funding.
A constitutional initiative on North Dakota’s November 2024 ballot proposes to eliminate property taxes based on assessed value, the Associated Press and others report.
If passed, this measure would:
• Prohibit political subdivisions from levying taxes on the assessed value of real or personal property, except for paying bonded indebtedness incurred through a certain date.
• Require the state government to replace property tax revenue to local governments, equal to the amount of tax revenue collected in 2024.
The potential financial impact of this measure is substantial. A top legislative panel estimated the cost of replacing lost property tax revenue at $3.15 billion every two years. This is a significant amount considering North Dakota’s 2023 two-year general fund budget was $6.1 billion.
A similar measure was on the ballot in 2012 but was defeated, with 76.54% of voters opposing it. However, some expect this year’s vote to be closer due to increased frustration and political changes in North Dakota since then.
Supporters argue:
- Property tax is viewed by some as an immoral tax that infringes on private property rights.
- North Dakota’s strong financial position, including oil and sales tax revenues, could potentially cover the lost revenue.
Opponents contend:
- The measure could lead to drastic cuts in various state services.
- It may result in a loss of local control over spending decisions.
- There are concerns about potential chaos in the legislative and appropriations process.
If the measure passes, several areas could be affected:
- Government Services: Funding for Medicaid expansion, hospitals, nursing homes, and education programs might face cuts.
- Infrastructure: Money for infrastructure projects could be at risk.
- Local Governance: Cities and counties may lose a significant portion of their budgets. For example, property taxes make up about one-third of Fargo’s budget.
- Tax Structure: The state might need to increase other taxes or create new fees to compensate for the lost revenue.
North Dakota has recently implemented tax reforms. In 2023, the legislature passed a package of income tax cuts and property tax credits estimated at $515 million. The 2024-2025 budget includes $358 million in income tax relief and $157 million in property tax relief.
