Property, income tax cuts approvedMost North Dakotans should see a significant drop in their school district property tax bills and a slight dip in their income tax the next year after the Legislature passed a bill Wednesday Most property owners’ taxes will go down 15 percent to 18 percent. Because every district is different, the amount will vary.
By: By Janell Cole, N.D. Capitol Bureau, The Jamestown Sun
BISMARCK — Most North Dakotans should see a significant drop in their school district property tax bills and a slight dip in their income tax the next year after the Legislature passed a bill Wednesday
Most property owners’ taxes will go down 15 percent to 18 percent. Because every district is different, the amount will vary.
The income tax cut that takes effect next Jan. 1 means only a few extra dollars a year for the lowest-income state residents and a cut of several hundred dollars for the highest-earning residents, a result that the bill’s critics attacked during debates as unfair.
Gov. John Hoeven plans to hold a bill-signing today to put the measure into law. It is Senate Bill 2199.
The changes are permanent.
Hoeven said the property tax portion of the bill represents historic change. He proposed it more than a year ago while running for re-election.
“That’s great,” he said after the vote. “It not only reduces property taxes, but reforms them.”
It calls on schools to drop their property tax mill levies by up to 75 mills. The state will replace the districts’ lost property taxes, dollar-for-dollar, with state oil taxes that have built up. That amounts to $295 million for 2009-11.
The income tax cut also contains a small reduction for corporations. The personal and corporate income tax cuts will cost the state $100 million in 200
“We have a large surplus,” said Rep. Al Carlson, R-Fargo. “We’re asking for just a little bit of that go back to taxpayers.”
The Senate passed the bill Wednesday morning 45-2 and the House passed it in the afternoon, 86-6.
But in both chambers, before the final vote, Democrats fought to remove the income tax cut from the bill, saying it should be voted on separately. They also argued that their constituents had not asked for an income tax cut, that the voters had rejected an income tax cut last November and that the income tax cut was disproportionately generous to the highest-income residents.
The income tax cut will be a little more than 12 percent for everyone. So, a taxpayer who is paying $100 in state income tax this year would pay between $87 and $88 in 2010. A taxpayer earning $100,000-$250,000 will be paying $459 less, said Rep. Lonnie Winrich, D-Grand Forks, who called the income tax cut’s forumula regressive and said, “I think this is unfair.”
Winrich and Rep. Chris Griffin, D-Larimore, also said 85 percent of the decrease in corporate income taxes collected will go to out-of-state corporations.
Sen. Connie Triplett, D-Grand Forks, argued during the Senate debate that the Senate had sent a clear message on Tuesday that property and income tax parts of the bill should be separated when it refused to accept the combined bill Tuesday and sent it back to conference committee negotiations.
She said the new version that Sen. Dwight Cook, R-Mandan brought back to the Senate on Wednesday was no improvement and that Cook and the other Senate negotiators had done nothing more than change the date some school districts will have to hold a property tax election.
“When you come back and report that you didn’t even bring up the topics that we asked you to discuss, that is not compromise, that is simple concession,” she said.
Most school districts’ mill levies will be no more than 110 mills when the law takes effect.
Three school districts with unlimited mill levies — Bismarck, Grand Forks and Williston — and several other school districts with mill levies higher than 185 mills, including Fargo, will have to go to their voters by 2015 and get approval to keep the unlimited levy or the levy that is higher than 110 mills.
Fargo’s current limit, set by voters, is 295 mills. Under the tax break law passed Wednesday, it will drop to 220 and by 2015, voters will have to approve the district keeping it above 110 mills.
Cole works for Forum
Communications Co., which
owns The Jamestown Sun