Officials: Measure would have deep effectsGilby Township is a 36-square-mile political subdivision in Grand Forks County that collects around $13,000 in property tax revenue that mostly pays for upkeep of rural roads.
By: By Christopher Bjorke , Forum Communications Co., The Jamestown Sun
Gilby Township is a 36-square-mile political subdivision in Grand Forks County that collects around $13,000 in property tax revenue that mostly pays for upkeep of rural roads.
“Some are graveled, some are dirt and some are barely roads,” said Don Larson, the township clerk and treasurer.
The Measure 2 tax initiative would eliminate the township’s property tax revenue and replace it with some form of state revenue. Larson cannot say how the township would get the money it needs for its roads under that system.
“The majority of our revenue comes from general property taxes,” he said. “It makes you wonder how they’d do this.”
North Dakotans can vote on Measure 2 on June 12. If it passes, it will replace all locally assessed property taxes with other state money. And like Larson, many are wondering how it would work.
Across the state, the number of entities is around 2,100 and total collections are $852 million, according to the North Dakota Association of Counties.
How the state will distribute money to the entities that now assess their own taxes is not explicitly laid out by the text of Measure 2. Its opponents say it will end local control for taxing entities and replace it with an overly complex state funding mechanism. But its supporters say it will bolster their budgets, which raises a question of where the $852 million will come from.
Inside one county
In Grand Forks County, total property tax collections for 2011 add up to $83 million, divided among 10 cities, 41 townships, 12 school districts and other local needs.
The biggest part goes to education, with Grand Forks Public Schools’ share accounting for $22 million, according to the district. The city of Grand Forks’ 2012 property tax revenue amounts to $16.2 million. The owner of a $200,000 home in Grand Forks would contribute $3,670.29 to those budgets and others.
On the other end of the spectrum are townships where the major expense often is blading and graveling rural roads.
In Brenna Township, southwest of Grand Forks, collections are around $40,000 a year, spread among 700 residents, said Township Chairman Beau Bateman. The “vast majority” goes to roads, including culverts and the occasional shot-up road sign.
Together, the county’s townships will collect $1.13 million this year, an average of $27,483 per township, to pay for those roads, culverts and signs. Counting just the roads the townships maintain, that’s 1,741 miles of gravel and dirt.
A new system
Much of the discussion around Measure 2 revolves around what many public officials have said is the uncertainty over how state revenue from oil taxes, income taxes, the lottery and other sources could replace property taxes.
For fiscal year 2011, state collections will add up to $2.76 billion with much of it already earmarked for various funds and commitments, according to the Office of the Tax Commission. State general fund revenue was $1.71 billion in 2011, with $1.62 billion in expenditures budgeted, according to the state Office of Management and Budget.
Whether the state can replace the $852 million property taxes with the revenue it has now or if it will have to increase its revenue is a matter of debate. How the money will be allocated to political subdivisions is another question.
“The only thing we can do right now is assume that if it passes, the revenue would be made up by the state,” said Bill Hutchison, business manager for Grand Forks Schools, which gets 27.5 percent of its revenue from property taxes. The uncertainty in the measure makes it hard to say what would happen, he said.
“It’s pretty hard to plan with the way it’s written,” he said.
Skeptics of Measure 2 also question the logistics a centralized distribution of money by a legislature that meets every two years to 1,300 townships, 53 counties, 270 school districts, 350 cities and other entities.
“How far are they going to drill down?” said Jeff Eslinger, communications manager for the counties association. “Are they actually going to review every park or every school district that wants a wing added on to their school?”
Measure 2 supporters argue that the complications are being exaggerated by opponents of the initiative who he said are dependent on property tax revenues. The state already provides a large part of local entities’ money, particularly in the area of education, without a loss of local control.
“Now we’re asking them to do the same again,” said Charlene Nelson, a Measure 2 coordinator. “I actually think it’s going to be far less complicated.”
Nelson believes that the measure would increase local control because it would eliminate the caps on property tax expenditures that exist now.
Traynor said that state control over local funding would not be as responsive to local needs, especially emergencies.
The state also would decide what those needs are, he said. “Whatever they feel is appropriate is what they’ll fund.”
The $13,000 collected by Gilby Township is a pittance compared to what cities and schools and collect, but the smallest and largest subdivisions both face the same bottom line.
“Nobody likes to pay property taxes, but it’s got to come from some place,” treasurer Larson said.
Christopher Bjorke is a reporter at the Grand Forks Herald, which is owned by Forum Communications Co.