Property tax measure could cost state about $1.3 billion per year, estimate shows

A proposed statewide property tax reform measure would cost the state about $1.3 billion each fiscal year, according to a state estimate.

Adam Mathiak, senior fiscal analyst for Legislative Council, provided the estimate to the Legislature’s Government Finance Committee during its meeting Tuesday.

A proposed measure would end property tax based on assessed value and rely on the state to fund budgets for counties, cities and school districts.

Mathiak said the measure would cost the state $2.66 billion per biennium. When adjusting for state funding that already exists to provide property tax relief, the impact drops to $2.46 billion per biennium.

The memo from the Legislative Council said that amounts to 40.4% of the general fund budget and 12.6% of the overall state budget.

“So particularly when you look at it in proportion to the general fund, a very large, large portion,” Mathiak said.

Former legislator Rick Becker is leading the sponsoring committee called End Unfair Property Tax that is gathering signatures in an attempt to get the measure on the statewide ballot in November.

The committee has a June 29 deadline to submit 31,164 valid signatures from North Dakota residents to the Secretary of State’s Office for verification.

The full language of the measure and the title can be found on the group’s website, endpropertytax.com, under the “about” tab.

If the measure is placed on the November ballot and is approved by voters, the measure would become effective Jan. 1, 2025.

Political subdivisions would no longer be allowed to levy property taxes beginning in 2025 payable in 2026, according to the memo.

The committee did not discuss the report.

There is no state property tax. Property taxes are generally collected by counties.

The North Dakota Association of Counties has questioned how the property tax revenue would be replaced.

“Although the potential measure states the lost revenue would be replaced by State dollars, it is unclear where the legislature would find the required dollars,” the association said in a resolution.

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