BISMARCK — A group of far-right North Dakota lawmakers wants to spend earnings from the state's oil tax savings account to eliminate residential property taxes. Supporters of the proposal say it would cycle money back into the local economy, but party leadership on both sides of the aisle have dismissed the legislation and put forth other plans to use the funds.

House Bill 1446 would dedicate earnings from the voter-approved Legacy Fund toward property tax credits for North Dakota homeowners and then reimburse counties for the lost income.

The earnings from the $7.9 billion fund likely wouldn't cover every homeowner's full property tax bill right away, but Rep. Jeff Magrum said his plan would eventually spell the end of the tax as the Legacy Fund swells with oil revenue. In the meantime, the lawmaker's plan would provide a significant discount to each eligible applicant.

During the last budget cycle, some of the Legacy Fund's earnings were used to balance the state's books, replenish an education fund and boost a rainy-day fund. Magrum believes lawmakers need to use the money for more substantive aid to their constituents. He said his proposal would have an enormous positive impact on the state's economy as homeowners put the money they would have paid in taxes to different uses.

"A legacy is a gift, and we should be helping our people with these Legacy Fund dollars, not growing government," Magrum said. "All the homeowners would benefit from this bill directly instead of having the state Legislature spend money on some project that hopefully (puts) money back into the economy."

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Magrum said he's heard only support for the idea back in his southern North Dakota district, but the bill, which has seven conservative co-sponsors, is unlikely to get through Republican power brokers who have devised their own plans for spending Legacy Fund earnings. The bill has not yet been scheduled for a committee hearing.

House Majority Leader Chet Pollert said property taxes are levied and spent at the local level, so it's not the state's place to directly cover those costs for homeowners. The Carrington Republican said Magrum's proposal doesn't pass the smell test as a "legacy project," which would provide a lasting benefit to North Dakotans decades from now.

Pollert and other GOP leaders have committed to a bonding bill that would set aside nearly $800 million of the fund's earnings for water infrastructure projects and other "long-range" endeavors. Pollert said the state should offer low-interest loans to city and county governments for major projects, which would indirectly generate property tax savings for residents.

House Minority Leader Josh Boschee, D-Fargo, said he opposes Magrum's plan because it only benefits homeowners, and renters make up a significant portion of his constituents. Democrats have also put forth a $2 billion bonding package that would make use of the fund's earnings for infrastructure projects and social services.

In March, Rep. Rick Becker, R-Bismarck, launched an unsuccessful push for a ballot measure that if approved by voters would have abolished property taxes and replaced the revenue using other sources, such as the Legacy Fund.

Contact Jeremy Turley at jturley@forumcomm.com or on Twitter at @jeremyjturley

hb1446 by Jeremy Turley on Scribd