Thirty years ago, a cranky state legislator sent a cranky note to the editor. "The Herald's never met a tax it didn't like," the curmudgeon declared.
Not so, the editor replied in this space. The tax that the Herald doesn't like is the property tax.
Thirty years later, the state has moved away from the property tax as a way to fund public schools.
This is a great start because it strikes at the disparity among schools that such a system perpetuated.
It should also result in lower tax bills.
ADVERTISEMENT
Lamentably, this has proven to be a challenge, for a couple of reasons.
One is that schools still have authority to levy some property taxes, so the burden of funding schools has not moved completely to the state, where it belongs.
And costs of other services seem to expand to absorb whatever money is available because school taxes are lower.
And more and more money is available from the property tax because property values continue to rise. That means that even though governments aren't increasing tax rates, they're still collecting more money.
What's to be done?
First, the practice of frequent reassessment needs to end. It's produced a steady increase in taxes due.
But that doesn't reflect money that a taxpayer actually has. Instead, it reflects what a piece of property might bring if it were sold.
Most property owners aren't interested in selling their property, however. They want to enjoy it for awhile.
ADVERTISEMENT
For business properties, the pinch is even sharper, because property taxes don't reflect a business' success. Instead, they're a fixed cost, due and payable no matter how much product goes out the factory gate or how many people come in the store's front door.
For retail businesses, this cost can be the difference between a good year and one that's only so-so. In many North Dakota communities, it can mean the difference between staying in business or closing the doors for good.
High property taxes discourage businesses from locating in the state, too. A large enterprise - say a fertilizer plant - needs a lot of ground and that means a lot of taxes to pay. The tax rate becomes an important part of location decisions.
Then there's the problem of valuing a specialized production facility. American Crystal Sugar Company raised that issue when it challenged valuations of its refineries. Sure, they're worth something, but only as sugar plants. The same is true of fertilizer plants and newspaper presses, for that matter.
These are only symptoms of the inherent difficulty with property taxes. They are the only tax that the payer can't control - and often doesn't understand.
Still, the tax on property is a valuable tool for governments. It's appropriate as a way to fund government activities that benefit property.
So what's to be done?
A state legislative committee is studying the myriad questions surrounding the property tax. It's a hard job, committee chair Dwight Cooke, conceded. He's a state senator from Mandan.
ADVERTISEMENT
Yet it's a challenge that the legislature must face and finesse.
State and local officials nearly unanimously condemned a constitutional amendment that would have eliminated property taxes. Voters killed it in the 2012 primary election.
Opponents of the amendment made an explicit promise. "We'll fix it," they said - though some took a few more words to make the point.
North Dakotans should expect that promise to be kept.
Mike Jacobs for the Herald
