In North Dakota, a significant ballot measure is poised to fundamentally alter the state’s approach to property taxation, potentially eliminating property taxes linked to assessed values. This initiative has stirred a considerable debate, with proponents arguing that it would deliver much-needed financial relief to citizens, while critics warn that it could drastically complicate funding for essential state services. The proposed constitutional amendment mandates that the Republican-controlled Legislature must replace the revenue lost from property taxes—a revenue stream estimated to cost $3.15 billion every two years. This figure represents a considerable portion of the state’s budget, which was set at $6.1 billion for the two-year period beginning in 2023, raising questions about the feasibility and implications of such a sweeping change.
Opponents of the measure express significant concerns about the potential fallout on vital government services and initiatives if property tax funding is abolished. State Representative Mike Nathe, a Republican and a member of the budget-writing committee, fears that the Legislature would enter uncharted territory without a clear understanding of how to navigate the appropriation process. He notes that critical funding for areas such as Medicaid expansion, education, hospitals, and infrastructure could face severe cuts. Don Vigesaa, Chairman of the House Appropriations Committee, echoes these sentiments, suggesting that state agency budgets and employee numbers may also be at risk unless significant adjustments are made elsewhere.
Conversely, Rick Becker, the measure’s champion and former Republican state representative, argues that the state possesses sufficient financial resources to support the proposed changes. Becker contends that the Legislature could utilize funds from the state’s $11 billion oil tax savings and reduce allocations for “corporate welfare” to cover any revenue shortfalls. He emphasizes North Dakota’s strong economic standing and asserts that the state can undertake this transformation without resorting to increased taxes or diminished services. His optimistic viewpoint posits that there is enough economic leeway to support local governments, despite concerns from opponents about the viability of alternative funding methods.
Opposition to the measure is consolidated within a coalition called Keep It Local, which includes over 100 organizations spanning various sectors, including agriculture, energy, education, and healthcare. Coalition Chairman Chad Oban likens the proposed initiative to using a “sledgehammer” for an issue that requires a more nuanced solution. He recalls a similar effort that failed in 2012 but expresses concern that recent political shifts and growing public frustration could lead to a narrower margin in this year’s vote. Nevertheless, he remains confident that the electorate will ultimately reject the measure, citing the need for more sustainable and careful approaches to tax reform.
If approved, the measure would establish the replacement revenue from the state at the level of property taxes collected in 2024. However, Oban warns that subsequent years would require increasing tax revenue to maintain essential services. Becker suggests that local governments could explore alternative taxation strategies, like an infrastructure maintenance fee, which would allow them to supplement state revenue without relying solely on property tax revenues. This proposal, however, raises further concerns about the feasibility of generating adequate funding for local communities, particularly in rural areas where sales tax bases are limited.
The impact of such a measure would significantly reshape the budgeting landscape for cities like Fargo, where property taxes account for $45 million, or roughly one-third of the city’s overall budget. Mayor Tim Mahoney highlights that a substantial portion of city funds is allocated toward public safety services, necessitating competitive pay for police officers and firefighters. He points out that with limited revenue growth from property taxes, cities face difficult decisions about funding essential services while also managing rising costs of living. Last year’s legislative session saw a package of tax cuts and property tax credits, underlining the state’s overall strong financial condition. Should the measure pass, it would take effect on January 1, 2025, setting the stage for an unprecedented shift in North Dakota’s taxation and funding approach.