Tax revolt from the top
North Dakota cities will be getting a taste of tax revolt this legislative session, but not from the usual suspects. The usual suspects would be angry taxpayers. The revolt this time is coming from lawmakers. The scariest of the tax-curbing bills...
North Dakota cities will be getting a taste of tax revolt this legislative session, but not from the usual suspects.
The usual suspects would be angry taxpayers. The revolt this time is coming from lawmakers.
The scariest of the tax-curbing bills coming down the pipe, from the perspective of local governments such as cities, is a bill that would cap property tax increases to 2 percent a year. The bill allows a higher increase, but only if there's a majority vote of the people.
Grand Forks City Council member Doug Christensen compared it to California's controversial Proposition 13.
The California law, passed in 1978, caps tax increases to 2 percent and requires a two-thirds majority vote of the Legislature on any state tax increase.
Christensen and other Grand Forks city officials discussed the proposed cap Friday in a conference call with their counterparts in other cities. They also discussed other bills that would curb local governments' taxing authority.
The bills are so new that it's not clear how much traction they would gain in the Legislature.
Council member Eliot Glassheim, who is also a Democrat in the House, said cities and other local governments have a lot of clout and he doubted the attempt to remove so much of their taxing authority would succeed.
The Herald could not reach Rep. Kim Koppelman, R-Fargo, the main sponsor of House Bill 1276, the bill to cap property taxes, nor co-sponsor Rep. Mark Owens, R-Grand Forks.
Finance director John Schmisek said the 2 percent cap wouldn't even keep up with inflation, which was 2.4 percent in the Midwest last year.
The city's tax rate, in fact, has tracked inflation pretty well, according to Pete Haga, the city's government relations officer. Increases in total property tax revenues beyond that rate, he said, are because of new properties coming into city limits.
Still, individual homeowners' tax bills have regularly grown at a rate faster than inflation. Last year, it was an average of 7.6 percent. This suggests other local governments the county, the school or park district may be to blame.
To a lesser extent, city officials also are alarmed by HB1298, which would limit local sales taxes to 1 percent, and HB1267, which would limit the increase in assessed values of homes, the basis on which governments apply property taxes.
Unlike the proposed cap, a bill to cap local sales taxes at 1 cent per dollar would not have any immediate effect on Grand Forks and other cities. It would only take effect when existing sales taxes exceeding 1 cent expire.
The city of Grand Forks has a 1-cent regular sales tax and a -cent sales tax that goes to the city-owned Alerus Center. The latter expires in 2029.
Schmisek complained that the bill wouldn't allow a higher sales tax even if voters approved it.