Buying down property taxes doesn't provide true relief
Addressing property tax should be a priority during a campaign.
We are hearing about a plan to reduce property taxes by 50% for two years. It sounds good, but this same buy-down plan has already been done in North Dakota and failed miserably.
Legislators are quick to point out that property taxes are the number one complaint of their constituents. Addressing property tax should be a priority during a campaign, and the promises should be followed through with action during the legislative session. The focus must be on something that gives true, long-lasting relief.
A state buy-down doesn’t fit that bill. How do we know the buy-down approach is a failure? Consider the legislature has already been buying down your property taxes. The amount of property tax the state is paying on your behalf is proudly displayed in your county tax statement, labeled Legislative Tax Relief. Do you think your property taxes went down substantially over the last few years? Me neither. A few legislators will tell us that although property taxes increased, they would be even higher if the buy-downs hadn’t occurred. The numbers tell a different story.
Consider the Tax Foundation’s annual report showing the average property tax in North Dakota in 2012 (before buy-downs) was 1.14% of the home’s true value, ranking 18th highest in the nation. The value of the state buy-down is a little over 0.6% of the home’s value, so if the plan worked, our tax would now be about 0.51%, which would put North Dakota in the wonderful position of 3rd lowest property tax in the nation. That’s not what happened. The Tax Foundation’s most recent report shows North Dakota’s property tax rate was 0.95%, 23rd highest in the nation. It didn’t work, because when the state subsidizes property taxes, the cities have more “elbow room” to raise them. That’s exactly what happened. If we combine what you are paying in property taxes to what the state is paying to buy down your property taxes, it comes to about 2% of the home value. That means our de facto property tax rate is now second highest in the nation! Buying down property taxes does not work. It never has, and never will.
Also, remember; it is your tax dollars going to the state, which are then being used to buy down your property taxes. The net effect of buy-downs is you are paying more in overall taxes than without buy-downs.
North Dakota is in the enviable position of being the most likely of all the states to abolish property tax. The best next step is to ask the legislature to pass a bill in the next session to allow voters to decide whether they want to eliminate property tax.
Becker, represents District 7 in the North Dakota Legislature.