Dustin Gawrylow, Bismarck, column: Practical ideas for property-tax reform
By Dustin Gawrylow BISMARCK -- With the vote on Measure 2 coming up on June 12 to abolish property taxes in North Dakota, it is important to look at two key questions: Why are property taxes so high? What can be done to reduce them? There are two...
By Dustin Gawrylow
BISMARCK -- With the vote on Measure 2 coming up on June 12 to abolish property taxes in North Dakota, it is important to look at two key questions:
Why are property taxes so high? What can be done to reduce them?
There are two main reasons property taxes have gotten out of control: The first is voter apathy. Local elections tend to have lower turnout and less interest. Many voters do not seem to understand that it is their local commissioners and council members who control their property taxes by not lowering the mill levy (tax rate) commensurate with the rate of growth in property values (tax base).
Local officials are very good at finding new and creative ways to spend the additional revenue generated by the expanded tax base instead of lowering the mill rate. As a result, the average property owner sees no personal financial benefit to a growing community.
The inability of local officials to recognize that a growing tax base should allow for systematic reductions of property tax burdens has created the perceived need for an approach like Measure 2.
The second cause for property tax anger can be best described with the phrase "passing the buck."
If one tracks the history of the property tax debate in the Legislature since the mid-1990s, it's clear that Democrats set the tone and the language that we use in the property tax debate today.
They were the ones who started using the phrase, "property taxes are high because the state isn't spending enough."
By the second session of his first term, then-Gov. John Hoeven adopted this language as his own to push for higher education spending and higher teacher pay, some might say as a means of "buying off" the teachers' union. Very quickly, Republicans recognized that this rhetoric was popular and adopted it as their own.
The idea that property taxes are too high because the state doesn't spend enough is at worst a flat lie, and at best a distortion of how our form of government should work.
So, what can be done about property taxes?
Here are a few practical and realistic approaches that voters and property owners should demand the Legislature enact if Measure 2 does not pass:
** Eliminate all discretionary local property tax exemptions, and replace all state-mandated exemptions with a single, flat, universal exemption of at least $75,000 for every property -- residential, commercial, and agricultural.
** Standardize the property assessment process by putting the state tax department in charge of training and overseeing all property assessments statewide.
** Eliminate the automatic tax revenue increases created by higher property values. When a local government wants more property tax dollars beyond those created by new construction, they should have to go on the record as raising residents' taxes.
** End the threat of eviction by prohibiting local and state government from seizing private property from citizens. Instead, use wage garnishment as a means of recovering property taxes owed.
** Freeze property values for taxation purposes after 15 years of consistent owner-occupancy.
** Either assess multi-unit residential properties based on the revenue they generate (just as agricultural land is assessed based on production values), or eliminate agricultural land taxes altogether, and tax farm residences the same as town residences.
These are just a few approaches to real, genuine property tax reform that some special interest groups still won't like but will have to deal with.
If Measure 2 fails and the Legislature likewise fails to reform property taxes, then the next time the measure is put to voters, the professional special-interest groups won't have a leg to stand on.
Gawrylow is the founder and president of Policy Matters, a North Dakota-based political and public policy consulting firm.