Here we go again: A proposal wafting through the North Dakota Capitol suggests using earnings from the state’s Legacy Fund to eliminate residential property taxes. The idea comes from the Republican side, including Rep. Jeff Magrum, R-Hazelton.
As reported by Forum News Service, House Bill 1446 would dedicate earnings from the Legacy Fund toward property tax credits for North Dakota homeowners and then reimburse counties for the lost income. In its early stages, the plan probably would not cover full property taxes for North Dakotans. But, FNS reports, the plan would provide a sizable discount to eligible applicants.
We know the reaction – elation, joy, glee – this potential windfall will create among the masses, and perhaps that’s the intent. However, it’s a bad idea, and one that does not fit the intended goal of the Legacy Fund, which continues to grow (it’s closing in on $8 billion) as it siphons a percentage of oil-related taxes into a savings account. It’s become a political cookie jar into which many lawmakers hope to reach.
The goal behind the Legacy Fund is twofold. First, it should be available as a source of income when the oil industry goes away, which will eventually happen. Second, it should be used to diversify the state’s economy so we’re not as dependent upon oil, a commodity whose dips and rises can wreak havoc on the state’s finances.
Those goals should not entirely restrict using dollars from the fund or from its annual earnings, provided those goals remain at the root of spending proposals. For example, a proposal to use its earnings for infrastructure loans is a good one, since a healthy infrastructure system can grow the state’s economy. Same for a proposal to use some of the earnings to help build the Theodore Roosevelt library in the Badlands, which will help boost tourism, another important economic sector in North Dakota.
Reducing or eliminating property taxes would be a longtime commitment that would inhibit the Legacy Fund’s growth while growing our dependence on oil.
Another question: Is it entirely fair to use the fund to pay property taxes? After all, not every North Dakotan owns property. Will rents correspondingly decrease as property taxes disappear?
Gov. Doug Burgum has repeatedly laid out his own beliefs on spending Legacy Fund dollars. He believes the criteria should be that any Legacy Fund spending proposal:
Have regional, state and/or national impact.
Be multiplied through partnerships, matching funds or loan funds.
Diversify our economy and attract our workforce.
Have lasting impacts beyond our current generation.
We believe the intent of the Legacy Fund was clear from the beginning – to reduce North Dakota’s economic dependence on oil. Giving dollars directly to the people does not meet that criteria. Nor does the proposal adequately meet Gov. Burgum’s Legacy Fund criteria.
Hopefully, this property tax plan – a bright, shiny object that certainly will capture the attention of many – will be swiftly defeated so the Legacy Fund can continue to grow and be used according to its true intent.