Tax cut debate intensifies among North Dakota lawmakers as Senate advances hybrid proposal

BISMARCK — As North Dakota's Republican legislative leaders prepare to sort out their differences on tax relief proposals, a package that mixes income and property tax cuts is starting to take form.

The state Senate has shown a greater affinity this year for proposed property tax reductions, while the House of Representatives and Gov. Doug Burgum have favored plans to slash income tax.

Last month, the House approved House Bill 1158, which featured robust income tax reductions, including a flat tax of 1.99% for income earned beyond the lowest tax brackets.

Heavy edits made recently by the Senate turned the legislation into a mix of proposed property and income tax reductions. The chamber voted 43-3 on Thursday, March 30, to advance the amended bill, volleying it back to House.

In its current form, House Bill 1158 would:

• Cut locally assessed property taxes statewide by roughly 16.7%.
• Expand the Homestead Property Tax Credit, which primarily benefits homeowners 65 and older.
• Eliminate personal income tax obligations in the two lowest tax brackets, effectively erasing the tax for single filers making $44,725 or less and married filers making $74,750 or less annually.

The $564 million in proposed tax relief included in the bill is close to evenly split between income and property tax cuts over the next two-year budget cycle. State leaders say higher-than-projected tax revenues give lawmakers the leeway to approve a sweeping tax break.

Sen. Jordan Kannianen, R-Stanley, said the proposed package represents an attempt to fulfill the Legislature's tax relief goals, though he acknowledged the legislation will be subject to further negotiations with House members.

If the two chambers don't concur on the bill language, a so-called conference committee with members of the House and Senate would be tasked with ironing out an agreement.

Sen. Tim Mathern, D-Fargo, made an unsuccessful push Thursday to remove the income tax relief from the bill, noting the Senate shouldn't be caving to the House's desires before formal negotiations begin.

"When there are negotiations going on, the best position is not to offer something of the other party’s position," Mathern said. "It’s to add your strongest point, and I think the strongest point here is property tax relief."

House Appropriations Chairman Don Vigesaa, R-Cooperstown, told Forum News Service he anticipates the final tax relief package will include a mix of property and income tax reductions. However, he noted House leaders still favor a plan that establishes a flat income tax, a feature that the Senate plucked from House Bill 1158.