North Dakota considering ‘reckless’ proposal, national budget research group warns

Minnesota’s neighbor to the west is considering a constitutional amendment that’s being called “one of the year’s most reckless state fiscal proposals” by the Center on Budget and Policy Priorities, a national research and policy organization.

North Dakota residents go to the polls June 12 to vote on Measure 2, a constitutional amendment to eliminate local property taxes and depend instead on revenues from the oil industry.

The amendment is “a highly imprudent experiment” that would disrupt critical public services like schools and local governments, according to a study from the national Center on Budget and Policy Priorities.

North Dakota’s Measure 2: High Risk for Little Reward warns the amendment would leave schools and local government services at the mercy of a volatile industry, whose revenues can vary dramatically from year to year.  Those services could be disrupted or cut if tax revenues decline.

The study warns that eliminating property taxes would:

• Lock North Dakota into a “course of action that is uncharted and risky.” North Dakota would be the first state to ban property taxes through its constitution. Property taxes are a major source of funding for schools and other local services. If that source of funding is replaced with something less reliable, public services could face cuts.
• Waste North Dakota’s opportunity to use funding from the oil boom to invest in the future. According to the report, North Dakota would “squander” that opportunity by using oil revenues on an approach “with very limited value to the state’s future economy.”
• Provide a “windfall” to out-of-state businesses and the federal government. Since North Dakota property owners would no longer deduct property taxes from their federal income tax returns, they would pay more in federal taxes. And out-of-state businesses that own property in North Dakota would no longer pay North Dakota property taxes.

According to the Center on Budget and Policy Priorities, Measure 2 is being promoted as a way to improve the state’s economy. In fact, the amendment would damage the state’s economic potential.

The report recommends North Dakota invest in necessities such as schools, health care, roads, bridges and job training; or look at more targeted improvements to the tax system, to ensure long-term benefits for all residents.

-Barb Brady