Senate sends back property-income tax bill to panel

BISMARCK — Senators sent a combined property tax and income tax package back to the drawing board Tuesday, with several saying their vote was “a message to the House” that the proposed tax cuts are issues to be voted on separately.

“We have a few days yet,” said Sen. Connie Triplett, D-Grand Forks. “There is some time to work on this and I really think this is an opportunity to send a clear message across the aisle that these are separate issues.”

Sen. David O’Connell ratcheted it up further, saying, “I think we need to send a message over to the House — they’re not the only ones running this outfit over here. It’s time the Senate take a stand on this.”

The vote Tuesday, to reject a conference committee report on Senate Bill 2199, was 27-20. It was a compromise bill OK’d House and Senate negotiators on Monday.

The bill returned to the committee for more negotiations with House members Tuesday evening. The committee changed only one thing — mandating some school districts hold a vote by 2015 instead of 2012 — passed it again and the Senate today will likely get the bill for another vote today.

The bill had started out as a $295 million property tax relief plan proposed by Gov. John Hoeven during his re-election campaign last year. Under the plan, school districts would cut their property taxes by up to 75 mills and the state would replace that tax revenue on a dollar-for-dollar basis.

The Senate passed the bill in a form similar to its original version. But when the House got it in February, it added a $100 million income tax cut. Hoeven had also proposed a $100 million income tax cut before the session, but as a separate bill, and with a more progressive formula that offered relatively more relief to lower-income taxpayers. The House killed Hoeven’s income tax bill.

Sen. Dwight Cook, R-Mandan, urged senators to accept his conference committee’s report Tuesday, saying the income tax cut was close enough to Hoeven’s plan to be considered and said the bill had been agreed to in conference committee in the spirit of compromise.

“There’s some of us that would like to put this battle to rest,” Cook said. “I think we’ve got a bill that, if it were voted up or down, it would pass and we could put this issue to rest.”

Sen. David Nething, R-Jamestown, said he favors the property tax cut but was against accepting the conference committee’s bill in part because it contains $10 million in corporate income tax reductions, a concept he opposed earlier in the session.

“I voted against a (separate) corporate tax bill, at least I thought I did, and all of a sudden it shows up again,” he said.

The income tax proposal would cut individual taxpayers’ rates across the board by 12.3 percent for a total of $90 million, and reduce corporate income taxes by $10 million.

The change the conference committee made Tuesday night affects the three school districts in the state with unlimited mill levies and several others with unusually high levies. As rejected earlier Tuesday, the bill said those districts would need to get voter approval by 2012 in order to keep their unlimited mill levies or to keep their mill levies higher than 110 mills after the tax relief takes effect.

The affected districts include Grand Forks and Fargo. The new version of the bill will say the election needs to be held by 2015.

Cole works for Forum Communications Co., which owns The Jamestown Sun

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