Measure 2 opinions: Measure’s opponents worried by its detailsProponents of Measure 2 are asking voters to consider the principle of the measure, according to Charlene Nelson, chairman of the sponsoring committee for the constitutional amendment.
By: Keith Norman, The Jamestown Sun
Proponents of Measure 2 are asking voters to consider the principle of the measure, according to Charlene Nelson, chairman of the sponsoring committee for the constitutional amendment.
At the same time, measure opponents are worrying about the details.
Measure 2 is an initiated constitutional amendment that would abolish value-based property taxes. Property taxes not based on value, such as special assessments, would not be affected. The measure is on the June 12 primary election ballot.
“It is a constitutional measure,” Nelson said. “It can’t contain every single detail. The details are determined by statute. The constitution is the principle, the details are the law.”
And she said the primary intent of the measure is clear.
“The principle is no more property tax,” Nelson said. “The law can define the formula (for funding the local governments) which can change as circumstances require.”
That leaves much of the implementation of the measure up to the North Dakota Legislature, according to Rep. David Drovdal, R-Arnegard, chairman of the Property Tax Measure Review interim legislative committee.
“The wording ‘legally imposed obligation’ is one issue,” he said. “There is no ‘legally imposed obligation’ defined in North Dakota law. The Legislature would have to determine what is a legally imposed obligation.”
Drovdal said the committee found similar issues with the portions “fully and properly funding these obligations” and “school boards have sole discretion in how to allocate the expenditures of this portion.”
Both phrases are part of Measure 2 and deal with the process by which the state would fund local governments. The questions were raised in a report prepared by the North Dakota Legislative Council dated November 2011.
The North Dakota Tax Department said in April that local governments statewide would lose $812 million in annual funding combined if Measure 2 is passed. The Legislature would be required by the measure to make up the difference.
The Property Tax Measure Review committee is neutral on the issue but was charged by the Legislature to review the fiscal impact of Measure 2. To determine the measure’s cost, committee members had to define what the measure requires.
It is the unknown nature of those future determinations by the Legislature that concerns governments.
“Our biggest issue is the unanswered questions,” said Jeff Eslinger, communications manager for the North Dakota Association of Counties. “There is a loss of local control. The state Legislature will come up with some sort of formula but the measure doesn’t say how that will be done.”
Nelson said the obligations should be anything that a local government is currently funding.
“If a county is providing services it has become an obligation,” she said. “The obligations would vary from county to county. We can’t have one-size-fits-all. Look at the local obligations and combine that with a formula that makes sure everyone is adequately funded.”
But Drovdal said any funding formula would have to be applied uniformly across the state.
“Any formula would have to treat everyone the same,” he said. “Otherwise you end up in court.”
Local officials question what services would be provided under that formula.
“The biggest concern I have is how we maintain emergency service,” said Jerry Bergquist, Stutsman County emergency manager. “For example, the public voted to fund 911 through a tax on phones. The public wants this service but the phone tax doesn’t pay all the expenses.”
About 40 percent of the 911 dispatch center funds come from the county general fund which is largely funded by property taxes.
Warren Tobin, Stutsman County veterans service officer, echoed those concerns.
“Now we’re funded by a portion of the property taxes,” he said. “Without a property tax how’s it funded? It’s not mandatory. The question would be ‘How would it be funded?’ It is a complete unknown.”
Some property taxes would continue. Special assessments, which pay for things like water mains and street improvements, levied against property would continue. Also, any property tax obligated to pay off a bond issue, such as a building construction bond, would continue.
However, future government construction projects would have to go through the Legislature to receive funding.
“You can’t take out bonding without a guaranteed source of funds to pay back the bond,” Drovdal said. “Each project would have to go to the state Legislature to get that guarantee. It would be difficult for rural districts to get funding. It could end up a rural/urban fight for any school, road or government building project.”
Nelson suggested local governments could explore home rule charters and local sales taxes as a way to accomplish projects not funded by the state.
“Property tax is not their only source of revenue,” she said.
While that is an option for cities and counties, it is not available to schools, townships, fire districts or park districts, Drovdal said. Those types of government entities do not have options other than property tax at this time.
Another unknown factor is the effect the measure would have on the size of government. Currently, the North Dakota Legislature meets every two years.
“They can fund the state two years at a time,” Nelson said. “There is no reason they can’t fund local governments two years at a time.”
“I think the Legislature would have to go full time,” he said. “There are just too many issues that would have to come to the Legislature to deal with in 80 days every two years.”
Sun reporter Keith Norman can be reached at 701-952-8452 or by email at firstname.lastname@example.org