Groundhog Day and Property Tax.

020218 Groundhog Day and Property Tax.  Rep. Rick Holman

It's Groundhog Day. We're waking up to a new day. Why does it look so familiar?

Just a few years ago, when oil prices and agricultural prices were booming, the ND Legislature made several adjustments in the tax code. One, significant for our local schools was to increase state funding from what had been a little less than 50% to about 80%. Since most of the local school costs were born by property tax, the resulting increase from the state required school districts to lower local property taxes. Good news for property owners.

At the same time, we passed legislation which decreased the oil tax and personal and corporate income tax. These actions did not, during those boom times, have a negative impact on state income. You may also remember, that, at that time, ND voters also decided to place one-third of the oil revenue in a newly created Legacy Fund which now has now grown to about five billion dollars which is set aside for some unknown future need. One more thing. We continued lowering local property taxes by making a state contribution to local property tax costs by funding an additional 12% of all county property taxes. For a while, County Commissioners were happy, property owners were happy, school superintendents and school boards were happy. Everyone was smiling.

Along came 2017. Both the oil price and oil production are much lower. Ag commodity prices are half of what they were five years ago. State taxes which paid for the rebates is no longer enough.  Our state constitution requires a balanced budget so, a year ago, Governors  Dalrymple and Burgum asked state agencies to bring him budgets that were lowered from the previous one. Higher Ed received dramatic cuts at all eleven institutions. Transportation had to delay some of their long-term plans. Social Services had to make decisions impacting the lives of thousands of their clients. The usual inflationary increases in salary and benefits were not to be part of anyone's plans. Hundreds of state employees had to find new employment.

North Dakota is still in a healthy condition. Population is up, unemployment is at record lows, and wages are increasing. The tax benefits put in place a few years ago can't be sustained at the past level. To meet local needs, many counties  must assess higher local property taxes to make up for what the state can no longer afford. The optimism of a few years ago hit reality and a return to past policy may be necessary. The 12% property tax rebate to counties is gone and partially been replaced by the state picking up local costs for social services. The school rebate of just less than $10,000 per student remained the same as the last two years with any inflationary costs being added to the local property tax bill.

For schools and counties to meet local needs, most property owners are seeing an increase in their property tax bill. The optimism of the legislature has hit reality. We're back to more local control and more local support which means; if you want something, you will likely have to pay for it yourself with local funds.

The Groundhog says "Good morning. It's 2008 all over again".  Rick Holman