Measure 2 proponents say tax is abused

Talk about it

There’s history behind the reason Measure 2 is on the June 12 ballot — more than the 30,000-plus ballot signatures that put it there.

“The property tax has been in here, in North Dakota, since we became a state, and actually it goes way back to the 13 Colonies,” said Keith Colville, Valley City, N.D. “Nine of those 13 Colonies had property taxes, and back then you paid property taxes and you had to pay to vote.”

Now tax abatements for certain properties have gone too far, Colville said, saying that 47 percent of the buildings in Valley City are tax exempt. According to Avis Richter, Valley City auditor, 47 percent of buildings in the city are indeed tax exempt, though 2 percent are discretionary and temporary as deemed by the city.

“The only way to level the playing field is to abolish property taxes,” said Colville, who is District 6 coordinator for Empower the Taxpayer, a group in favor of Measure 2. “Get rid of them and find another fair and equitable tax.”

Colville draws a parallel between property value assessors now and personal property tax assessors from the 1960s and earlier.

Back then, everything from clothing to furniture was assessed and a tax was levied based on what taxpayers owned. Assessors would roam through homes digging through closets to cover everything, he said.

“It’s just being abused so much, we’re actually getting back to the way personal property tax used to be,” Colville said of property taxes.

The personal property tax was repealed in 1969.

Since then the state has tried some attempts at property tax reform, but Colville said the language was confusing and the process lengthy.

“They’ve tried several different reforms at the state level but they’ve just been an utter failure,” he said.

The state also has a healthy surplus and a growing legacy fund but property tax increases continue, Colville said.

“It’s like a weed. You don’t cut a weed off — it grows back,” he said. “You pull it out by its roots.”

Rep. Joe Kroeber, D-Jamestown, said the state has three taxes, sales, income and property tax, to fund things.

If each of those taxes was a leg on a stool, the property tax leg has gotten too long, causing an imbalance between the other legs of income and sales tax, Kroeber said.

“I think that a good, balanced tax approach is the best way to handle taxation and I think in North Dakota that we’ve had a pretty good balance except there’s no doubt that the property tax leg of the stool of the three-legged stool got too long — I don’t think anyone would deny that,” he said.

One reason is on the state level, lawmakers have not been putting in the money needed for elementary and secondary education, he said. Five or six years ago half of the property taxes collected by the state went to elementary and secondary education. That number is smaller now.

“We at the state level really aren’t doing our share,” Kroeber said. “...When the income at the state level got very stagnant and going up very, very little, we ended up of course forcing all of the local property taxes to take an increase on both your city level, your county level and your school level, especially as they had to take on more and more responsibility for that increase.”

Sen. Dave Nething, R-Jamestown, said it’s not the Legislature’s responsibility to reform a tax that’s assessed at a local level, when the funds are used for local governments.

“The Legislature hasn’t done much with the tax because it’s not our tax, it’s the local tax,” Nething said. “The only people it affects are local government. Until such time as the local governments make the decisions relating to it, the Legislature hasn’t made any.

“Only recently in the last few years, until we’ve had some extra money have we only been able to offer some property tax relief,” he said.

One program to offer property tax relief is the homestead tax credit. There are age, income and other requirements, as the program aims to offer property tax assistance based on a number of factors.

“Other than the homestead tax credit we really didn’t have the money to do anything without increasing the taxes sustainably and that’s just what’s going to happen if Measure 2 passes,” Nething said. “There’s going to be a tremendous increase in sales tax, probably 20 percent, and a 30 percent increase in income tax just to make up what the difference is. We haven’t gone into those high taxes before.”

Whatever the taxes could be, Measure 2 presents a big change in the state, said Leon Mallberg, the 1988 Republican candidate for governor who lost to Democrat George Sinner. Mallberg is a Measure 2 supporter from Dickinson, N.D.

“In theory prohibition should have taken place,” Mallberg said. “In practical application the people said ‘we were wrong’ and it’s awful tough for any society to look themselves in the mirror and say ‘we were wrong.’ We have the same magnitude decision coming on June 12. People should be assessing each aspect.”

Other than property tax, and personal property tax, taxes have traditionally been optional, Mallberg said.

For example, if a smoker doesn’t want to pay the imposed taxes on a pack of cigarettes, that smoker always has the choice to grow his or her own tobacco and manufacture his or her own cigarettes, he said.

The same argument can be used for anything from food to transportation. But that’s not the case with property tax, Mallberg said.

“You have the option of saying ‘no I’m not going to buy that car because I’m not paying $2,700 in sales tax,’” he said. “When you own a home you don’t have the option.”

What the property tax is now used for is something else that bothers Mallberg.

Property tax, when created, was supposed to be used for police and fire protection, snow removal, street cleaning and street lights, etc., he said.

Now with tax-exempt organizations not paying their share, other taxpayers are forced to contribute extra, Mallberg said. This includes businesses given local exemptions for any multitude of reasons.

If a church builds a new school, the first step is to immediately be taken off the tax roll, he said. Churches are defined as tax exempt by North Dakota Century Code.

Still, property owners have no say in property taxes or any potential increases, he said.

“The property owner has nothing to do with setting of mills or the assessment of property, but is expected to be a quiet participant with no input,” Mallberg said. “Where is the concept of local control in that?”

Sun reporter Ben Rodgers can be reached at 701-952-8455 or by email at brodgers@jamestownsun.com

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