BISMARCK – About $812 million in property taxes for 2012 would be eliminated if North Dakota voters approve Measure 2 in June, a state research analyst said Monday.
Kathy Strombeck of the state Tax Commissioner’s Office gave legislators an estimate of the fiscal impact if voters decide to repeal property taxes effective Jan. 1, 2012.
The estimate assumes the effective date of the measure would be interpreted to initially repeal 2012 property taxes that would be due and payable in 2013, Strombeck said. It is assumed 2011 property taxes – due and payable in 2012 – would not be repealed, she said.
After Strombeck’s report, supporters and opponents of the measure debated its fiscal impact during a meeting of the Legislature’s Property Tax Measure Review Committee.
The public is being improperly informed about effects of the measure, said Bob Hale of Empower the Taxpayer, which supports Measure 2. There wasn’t information compiled for legislators about the economic impact of keeping $800 million a year in the private economy, he said.
“This allows those businesses to have that money to invest and that investment results in local sales, state sales, income tax and other tax revenues that more than make up for (the property) taxes abated,” Hale said. “That portion of the equation has not been addressed.”
He said the legislative committee also hasn’t fulfilled its responsibility to study what laws are needed to implement Measure 2.
Rep. Dan Ruby, R-Minot, said legislators should start to discuss a formula for funding local governments. Doing so would remove some of the opposition and fear of the unknown, he said.
Rep. David Drovdal, R-Arnegard, said the committee will address legal changes if the measure passes, but it was decided not to spend taxpayer money on creating legislation unless it’s needed.
Susan Beehler, a Mandan resident, also didn’t think legislators were looking fully at the fiscal impact and called it a disservice to taxpayers.
Instead of “whining about messes that this (measure) would create,” legislators need to “put on your big boy and your big girl pants and get on with it,” she said.
“If this is what we want, then it needs to be done,” Beehler said.
Property taxes are an “ineffective, inefficient way” to tax for local services, she said.
Drovdal said legislators do want to give people the right to vote and pointed to the Legislature’s support of allowing another measure – the Fighting Sioux nickname – go to a public vote.
McLean County State’s Attorney Ladd Erickson thought the fiscal impact didn’t reflect major cost items and said Measure 2 supporters are exaggerating the proposal’s benefits.
Sponsors are “constantly” saying legislators will pay local governments’ costs, he said.
“The public is being led to believe that this is a free ride,” including if anybody wants a new jail or school, Erickson said.
Drovdal said the Legislature would determine what proper funding is – including decisions on new buildings – not local governments. Erickson said the measure destroys local control.
By changing government from a diverse system to a centralized system, costs are going to “dramatically increase,” Erickson said. He also criticized claims that 12,000 government jobs could be cut and that money could make up the majority of revenue lost from eliminating property taxes.
“Problem is, we don’t have 12,000 state employees,” he said.
The state has 11,235 full-time equivalent positions, according to the Office of Management and Budget. Even if every state employee was fired, there’s still a shortage in funding the measure, Erickson said.
Sen. Dwight Cook, R-Mandan, said if Measure 2 passes, there would need to be a special session called to address local governments’ budgets. He said that cost would need to be added to the fiscal impact. The Legislative Council says a special session would cost an estimated $50,000 a day.
Drovdal said 28,000 people pushed the proposal forward. Legislators need to be aware of that and see what they can to do to continue to address tax concerns, he said.