Local officials are eager to tackle property tax reform but worry about state budget caps impacting their plans
Montpelier: Local government leaders are stepping up to discuss property tax reform. They’re ready to dive in, but they’re worried about the state putting caps on their budgets.
During a recent public hearing, the House Finance and Taxation Committee listened to a bill that aims to help homeowners pay little to no property tax. This plan comes from Gov. Kelly Armstrong.
Rep. Mike Nathe, who’s leading the charge on this bill, said it’s all about responding to what voters want. They’re asking for action, and they want it now.
The proposed bill would boost the primary residence tax credit from $500 to as much as $1,550 starting this year. It also limits local property tax budgets to a 3% increase each year, allowing local governments to carry over unused increases and ask voters for more if needed.
Matt Gardner, from the North Dakota League of Cities, mentioned that mayors statewide back this bill and want to make it work. He suggested tying budget caps to inflation since cities have been facing rising costs.
He pointed out that expenses like paving roads or buying fire trucks are out of their control, and many North Dakota cities are small, with fewer than 1,000 residents. The bill needs to be fair for everyone.
Matt Perdue, from the North Dakota Farmers Union, also supports the bill but raised concerns about fairness between farmers and homeowners. He believes farmers should get similar tax relief and warned that budget caps could hurt rural areas.
Amy De Kok, from the North Dakota School Boards Association, echoed the need for property tax relief but reminded everyone that schools have unique responsibilities. She suggested changes to help schools plan better.
Committee Chair Rep. Craig Headland acknowledged that finding a solution won’t be easy. He hinted that any property tax reform will likely involve limits on local government spending.
North Dakota voters recently shot down a measure to eliminate property taxes based on assessed value. Still, they expect lawmakers to provide some relief this session.
The bill is projected to cost the state $535 million for 2025-27, partly funded by the Legacy Fund, which is the state’s oil tax savings account. Proponents believe this relief could eventually be fully funded by the Legacy Fund, easing the burden on the general fund.
If the bill passes, it will need to be revisited in future sessions. The tax commissioner is also asking for an extra $70 million to support property tax credits for veterans and renters.
No immediate action was taken on the bill, but Rep. Jared Hagert, the committee vice chair, mentioned that more property tax proposals are on the way. They’re looking forward to discussing them in detail.
