North Dakota needs Property Tax Relief
Tax cuts aren’t usually high on the Democrat agenda. Good schools, good roads and caring for the poor costs money. Paying employees, police and teachers what they are worth costs money. Sure, we’d all like low taxes; but we prioritize Good Government and Social Justice over low taxes. We, admittedly, are not big on tax cuts.
Property taxes are different. We are strongly in favor of property tax relief. We have no urge for services to be cut, so that revenue will need to be raised elsewhere; but property tax relief is big. So here is some of the history of how it became important to the ND Dem-NPL and some of thinking behind the platform plank.
The issue rose to prominence
when the oil prices fell and the
revenue crisis began.
The Republicans lowered the
oil extraction rate from 6.5% to
5%. Voters had set the rate
in an initiated measure, but
Republicans cut the rate
and added low price triggers
because they think they know
more than the voters.
This cut happened when oil
prices crashed in 2015 and
Republicans feared that their
low price trigger would come
into play. This was “emergency”
type thinking and action that
totally lacked any foresight.
Democrats fought against this
thinking. A cut would kill
important funding… like K-12 education, medical assistance and improved care for the elderly. The two big things we were defending was a new program to fight addiction (back then, meth and a new thing called opiods) and an extremely
popular new program called Property Tax Buy-down.
The property tax buy-down was meant for all counties to share oil revenues. Property taxes did fall some, but mostly it allowed counties up their game for projects like abuse centers and road repair. Local schools also benefited greatly. They cut their mills a little bit, but still had extra dollars.
Republicans promised this tax cut would never effect the property tax relief checks they were sending to the counties. Well, either they were wrong or they were lying. Democrats loudly warned people what would happen; and it did.
To compensate, Governor Dalrymple then did a 10% across-the-board spending cut. Property tax relief checks stopped. Counties were shorted money. County commissioners took the blame. So part of the reason we Democrats back property tax relief (and what makes it makes a big thing) is that it’s a broken Republican promise.
There are other reasons that property tax cuts are popular within our party. It is the most regressive (unfair) of the 4 major revenue sources (oil, income, sales and property). Income taxes are the most fair. If you make a pile of money, you pay a pile of taxes. If you didn’t make much you don’t pay much in taxes.
Sales taxes can be made “more fair” by exempting life’s essentials like food, medicine and clothing. User taxes and gas taxes are pretty fair.
Property taxes are regressive. Poor and rich pay alike, they both spend the same in property taxes. This is not equitable. Elderly prefer to remain in their homes. We are not there yet, but property taxes climbing will soon make that impossible. Even if their home is paid for, that annual bill is becoming too much for some of our senior citizens because
they are on "fixed incomes". A fixed income has no room for increasing bills such as a jump in property taxes.
If a farmer has a bad year, he (or she) pays pretty much nothing in state income taxes. If he has a good year, he pays. If a drought or flood ruins crops, he won’t be paying any state income tax. However, that same farmer pays property taxes. Around here that runs about $16 per acre. So if the average farmer is paying on 1,000 acres he owns and indirectly paying on
1,000 acres he rents and is on the hook for $16,000 directly and $32,000 if you add in indirect taxes in higher cash rent.
This is way more than people pay in income taxes for this state. You’d need to make over $1,000,000 per year to be over $30,000 for income tax (2.9% top rate and that’s after deductions) So your average farmer is paying in more taxes than the few office types who make a million bucks a year.
The cruel part of property taxes is that you pay them in good years and in bad years. If you get a drought or a flood, you have property taxes. They are always there whether the farmer made money or lost money. That is very regressive.
SO TWO IMPORTANT POINTS
The District 10 Dem-NPL has property tax relief as its main pro-agriculture policy. It’s the right thing to do. Farmers are really getting screwed on this. As Republicans continually look for ways to cut income taxes, we are right there screaming at the injustice.
Secondly, we have come together as a District and be prepared to support property tax RELIEF. Now “relief” is much different than “cut”. Relief is when the state sends money to the counties to lighten the burden. Cuts will result in a decrease in services. County commission budgets are already an embarrassment. The same for school funding. We imagine that counties will apply half of the state relief to lowering real estate taxes and use the other half to improve services.
So we need to pass property tax relief. We should pay as we go by returning the oil extraction tax to 6.5% that the voters passed. That would bring in about $500,000,000 per biennium which would give each county about $500,000 a year.
Oil extraction tax rates have gone down. As a result, property taxes have gone up. This is wrong and needs to be reversed.