BISMARCK — The North Dakota Senate Appropriations Committee amended the leading property tax and reform bill on Thursday, March 27, at the request of the Senate Majority Leader David Hogue.
The committee heard six proposed amendments from three different legislators on House Bill 1176. Four of the proposed amendments were from Hogue, R-Minot. The committee shot down all amendments but two of the majority leader’s.
The bill is sponsored by Rep. Mike Nathe, R-Bismarck, and includes Gov. Kelly Armstrong’s proposed expansion to the primary residence tax credit. It also caps the amount political subdivisions can raise their levies to 3% a year and expands the homestead and renter’s tax credits.
It received a unanimous 16-0 recommendation to pass as amended out of committee. It now goes to the Senate floor.
Contributed
The first amendment adopted by the committee was referred to as the “skin in the game” amendment by Hogue. It seeks to ensure no property owner’s tax liability reaches zero, ensuring everyone contributes some property taxes and has some “skin in the game.”
It would do this by capping the total relief the bill provides at a maximum of 75% of the total tax liability of a property owner, guaranteeing that a property owner will always pay at least 25% of their tax liability on their primary residence. However, the amendment would also guarantee a baseline minimum credit of $500 for anyone who applies for the primary residence tax credit and is approved.
The amendment also lowers the cost of the program by lowering the maximum amount available from the primary residence tax credit from $1,450 to $1,250. This reduces the cost of the program by roughly $75 million and makes it so the entire program can be paid for with Legacy Fund earnings, leaving the General Fund untouched.
“If you reduce the so-called ‘skin in the game’ for all those rural primary residence owners … they will have no economic stake in voting on a lot of proposed property tax increases,” Hogue said. “Be they bond issuances or other types of votes that voters are asked or called upon to decide whether they want to enhance certain infrastructure within their community.”
Armstrong said the amendments added in committee were “not nearly good enough” for North Dakotans and Nathe said reducing the tax credit is not what residents want.
The governor said should the bill go to a conference committee, “We will be pretty adamant that it needs to get brought back up to $1,450.”
He said he would strongly recommend the Senate defeat the amendments and then pass the bill but the, “Senate’s going to Senate. They get to own this now, at least until we get into a conference committee, that’s on them.”
Hogue’s second amendment that was adopted dealt with legislative intent. It includes wording in the legislation that encourages the next Legislative Assembly to consider using Legacy Fund earnings to provide tax relief to a broader group of property classifications.
Armstrong said he does not support Legacy Fund earnings going to “out-of-state landowners and out-of-state businesses.” He believes this would happen if the Legacy Fund earnings are used to create tax relief for agricultural and commercial property classifications.
The governor said the amendments brought forward in the Appropriations Committee were not discussed with him ahead of time. He has said routinely that he is open to discussions on the bill and that his “door is always open.”
He added that the lack of conversation prior to introducing the amendments was not the proper approach and the opposite approach to how those working on property tax relief and reform have operated since they started this process in June.