The billion-dollar question: Cash-flush N.D. sure to see property tax relief, but how?
June 16, 2012 at 2:17 pm in Grand Forks Herald
The tax North Dakota homeowners love to loathe is about to get another whack. North Dakota voters spurned a chance last week to abolish the property tax in the primary, but the state Capitol is brimming with ideas to provide more tax relief and better fairness.
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When I took finance and accounting courses, I was taught budgets should balance.
ND is overtaxing those of us in the productive private sector.
Hot debate. What do you think?
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Kevin, if you took finance and accounting classes, then you know that it is wise to conservatively estimate income. The Legislature has worked with conservative numbers in regard to income. Yet you complain when the state’s revenue exceeds expectations. Who would have known in 2008 that by 2012 oil production in North Dakota would quadruple? Who knows from month to month what the price of crude will be?
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Maybe so, but can they actually let other business pay a lower tax than those related to oil? I don’t think that would fly because yolu can’t single one type of business to pay more can you? Or does oil get a higher taxation because it’s removing resources from ND and not manufacturing or selling goods? I really don’t know. Does anyone know about this?
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The basic thing is that oil hasn’t been taxed at all, while other property has, so it’s not umfair to tax now, only when it produces income. Other property has been carrying the weight for years. So we will see a remix. Certainly there will be efforts to knock the oil taxes way down. How that flies in the legislature will be one of those tensions between votes and dollars. Are your legilslators or executives for sale? The history of ND is not that companies were surprised they could by legisltors, they’ve been surprised they could buy them so cheaply.
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My first suggestion would be to eliminate the exemption for a farmers residence. Why they deserve to not pay taxes on the house they live in while everyone else has to makes no sense to me. All the other taxpayers have to make up their share.
Before anyone says it’s because they pay taxes on their farmland I have to say I own farmland also. I pay taxes on that as well as my house.
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I agree. I can see that some farmsteads value can easily reach one millions dollars. A plush house, pole sheds, shops, grain bins, grain drying systems and the like are worth alot.
If everyone paid, then the real estate tax would be fair.
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I run a farm. I don’t pay taxes on the farmstead, but I do pay about $12,000 in property taxes on the land that I own and a few other acres that I rent. I wouldn’t mind paying taxes on my house, but there are a few complications.
1. How do you determine a taxable evaluation? There’s a house, farmstead and 40 acres down the road from me. It’s been for sale fore almost three years. Asking price: $250,000. If we were 20 miles closer to Grand Forks, they might have a bite, but no luck yet. Houses don’t sell around here very often, and complete farmsteads never go on the market. I’d like to see a plan on how the county is going to determine what the house (and all the buildings) are worth.
2. If I have to pay the same taxes as those individuals on the concrete, then I want the same access to services. The last time a police officer came to my farm, it took almost an hour. Fire and ambulance will take even longer. Snow removal is OK, you can usually count on at least one pass in front of my house completed 24-36 hours after it stops snowing. There’s no mosquito control. If I pay more in taxes, I want to see the same level of service as everyone else in the county. That’s fair. I don’t think we can afford it (especially the big airplane that kills mosquitoes in Grand Forks – I WANT THAT!).
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Jeff, valuations are not that hard. Typically a valuation will consider market value, replacement value and cost. Your nieghbor’s home and 40 may have been on the market for three years, but that just implies that the selling price is to high. I bet if they put it on the market for $10,000 it would sell immediately; hence the market value is somewhere in between the current asking price of $250,000 and $10,000. The fact it hasn’t sold doesn’t mean it can’t be valued, it just means they are asking too much.
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Jeff, concrete streets are special assessments and not part of the property tax; I am sure the county would be happy to put in a street near your place but you should realize that since you are the only property owner you’ll be the only one specially assessed. Also, the city assesses a user fee for the mosquito spraying. Your complaint about law enforcement is presumably a county matter, the Sheriff’s Department, and I assume that if you paid more county taxes you’d get more deputies; I assume that you wouldn’t agree to be assessed a city property tax. The exemption of your farm home has nothing to do with the amount of services you receive. Think about it for a second, if an electrician decides to live in the country he won’t get an exemption, you have to be a farmer. Take a look at your property tax bill and you’ll discover that the majority of that bill represents tax imposed by your school district. I doesn’t matter to me if the exemption exists or is eliminated, but your assertions that farmsteads can’t be valued and that you get less services are not valid.
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They’re all good points, but I have a few clarifications.
1. Tax evaluations are a complex procedure. Anyone who claims otherwise has never been a part of the process. I’ll never sign off on a plan that will raise my taxes based on a taxable assessment between “20,000 and 250,000″. I never asserted that it can’t be done, it’s just going to be a complicated process, and I’d like to see the process before I sign off on the plan.
2. Yes, the pavement pounders get roads built by special assessment. My idea is to improve roads in the county through a co-op. It worked to put power up out here, it’s how we got clean water as well. If someone came to me with an idea to start a road building co-op, I’d sign in a heartbeat. I’m unsatisfied with the current police and fire protection, ambulance service and roads and bridges in the county. While you may be comfortable assuming that things would improve with more money, I’m not. I’m the one you’re asking to pay more in taxes, and I want assurances (in writing) that services in my community will improve with the extra cash.
3. I did look at my property tax statement. For a 100 acre parcell that I own in Elm Grove township, I paid $1,161.61 (roughly $116/ac). The school received $584.25 (about 50.29%). So, while you are correct that the school receives a majority of my taxes, it’s only by a slim margin. I don’t understand what the schools have to do with anything. In my opinion, they don’t receive enough money to do their job properly. If someone came to me and said they were increasing taxes by $20/ac for school use, I’d be OK with that.
4. Robert: I live in a “plush house”. What color are the shingles? Sure, some live in very nice houses, just like some people in Grand Forks live in beautiful Victorian homes on Reeves Drive. But not everyone. Hal Gershman is a very successful businessman, but is he indicative of Grand Forks business owners as a whole? If we remain specific, I believe a real and rational reform of property taxes is possible. However, we loose all credibility the moment we use a broad brush.
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Jeff, where I live the farmers live like kings. That is Kings with a capital “K”.
It would be more fair for everyone if everyone paid real estate taxes. I am a partially disabled veteran. I can have a certain percentage of my house property tax exempted. Do I? No. I believe that I should pay for the school, roads, bridges, etc. like everyone else. I use them.
I know some other disabled vets probably need to take the exemption. In my case, I still am able to work some and see to it that I pay my fair share.
Nobody likes taxes. But if we are going to live in a civilized world, we need to pay taxes. The way our politicians spend the money is another matter. Most will agree that highways, streets, bridges, school, fire protection and other needed services are for the common good. Its just that they need to be paid for.
If yo have qualms about services in your community, attend the school, fire district (if you are in one), township, county, water board, etc. meetings and voice your opinion. If you are able, maybe you could run for those board positions.
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First they need to start to put controls on local entities and what they can give away. Force them to stay within a budgeted amount of their overall tax base. My personal opinion is that no city should be able to give away more than 20% of their overall tax base.
Second they need to remove any loopholes that currently exist in the system and get everyone who is from inside the state, external to the state to start ponying up their fair share of property taxes. They all receive services from the city and they should all pay for those services.
Finally they need to pass a law that eliminates at least 50% of the overall tax burden of any legal resident who resides in North Dakota.
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The state should start by looking at the state sales tax. If they drop the tax on clothing and drop the state rate to 3%. It would be a savings across the board for everyone in the state (I do not know of anyone who walks around this state in the nude, it could get cold) .
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Sounds good…But you know what would happen then right? The local governmenst will start thinking, “Now that the sales tax is low we can afford to do some new special project and tag a little sales tax locally…People wont mind if they’re paying less in the first place. Not saying they shouldn’t lower the sales tax, but I’m predicting that someone will come up with a great idea to build on to the Alerus or something….
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True but the local people would get to vote on that.
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Like we voted on the new and un-needed school?
Like we voted on the new airport terminal?
Like we voted on the No Choice fitness center?
Government should be prevented from having excess funds, politicians have NO self-restraint. They will raid any fund, spend any money, accept any debt on behalf of the taxpayer, because all they know is SPEND SPEND SPEND.
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Why don’t they remove a tax that would benefit every resident of the state and remove the state income tax
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Eliminate sales tax and the state would steal business from surrounding states and Canada.
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I have to disagree. Montana has no sales tax. The yearly license tab in Montana for a Chevrolet S10 pickup is $900 a year. An S10 is a small pickup. If a couple had a pickup and car, they could be paying $1800.00 (or more) for license tabs for those two vehicles.
The loss of sales tax revenue would have to be made up somewhere. North Dakota residents would be paying other taxes to make up for it, while visitors that use our highways will pay less.
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Every biennium the legislators of ND go off to Bismarck, just like Pinocchio, full of good intentions. Then they all get together, the lobbyists show up, and all the campaign promises go down the toilet.
Well-loved. Like or Dislike:
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I agree. I am sure that lobbysists will be trying to get tax breaks for their “causes”.
Any business that does business in the state needs to pay some taxes. Water, sewer, highways, garbage landfills, fire protection, etc. need to be payed for. A new fire pumper for a small town runs around $175,000. That may not even include equipment. We need to keep the infrastructure in the state up to date.
Hopefully, the legislators will not “give away” tax revenue to out of state corporations.
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I have a book that has a bunch of really bad ideas and/or actions that have hapened in governments around the world. I don’t remember the state or town, but some mid sized town fo between 20 or 30k decided they needed a new fire truck. They couldn’t looke for something tha it their needs, but had to go top shelf with a state of the art truck that reached something like a six story building….The highest buildings in the town were only two story. This state of the art truck cost something like $190,000.
Some might think that was planning ahead……Most thought it was basically the idea that they might as well get the best since it was the public’s money. If only we can get them to think of the public’s money as if it was their money.
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In the mid 1970′s the average fire pumper was $50,000. Now they are $175,000 as a median cost. The big increase in price lately, is the diesel emission standards, which caused the engines to increase in price drastically.
When a community purchases a fire pumper, it has to serve the entire community. It may have to pump at full capacity for a grain elevator fire, so the largest pumper is needed. Also, having a well equipped fire department gives a good rating for insurance ratings, which decreases fire insurance premiums for property owners, especially commerical structures.
So if a community purchases a fire pumper, that may cost $175,000 and keep it in use for 20 years, that truck will pay back the community many times over in reduced fire insurance deductions, not to mention its crucial use at fires where lives and property are at stake.
The main thing is for governing bodies (county commissioner, city council, etc.) to spend the money wisely. I hate to say this, but alot of people do not care. They do not get active in local politics and go along with whatever decisions the governing body would do. If a city council was going to “make” water go uphill, some people have no qualms with it.
That is why I like public hearings. You can go to that public hearing and tell your reasons to support/oppose public spending. We all know that some governing bodies have no compass and and spend money on stupid things. Going to a public hearing and telling you opinion can help give them some direction.
[rant over]
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I understand what you’re saying and agree. I don’t know where that book is right now, but the way it told the story it was like a major over kill for a pretty small town when they had an option to purchase an engine for cheaper that would have more than fulfilled their needs. Which is what most of us would do if the money was coming out of our pockets, but somehow if coming out of public funds people seem to want to go top shelf.
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One issue that you have to remember about this oil activity, is that it is putting a strain on infrastructure in the western part of the state.
Some of that tax windfall needs to be put toward highways, roads (county & township), streets, bridges, schools, etc..
The strain on the western part of the state is immense, with alot of people moving in. Cities will need to expand their water and sewer facilities and schools we need to add more teachers, school buses, building, etc..
Of course, there maybe some left over in tax revenue, so looking at tax relief is a possibility.
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Here’s a very good example of how “trickle down” economics doesn’t work. Companies are making money hand over fist in the oil fields, but I don’t hear any one of them saying, “I guess we are making so much money, we’ll just lead the effort to rebuild roads and other infrastructure by being a good neighbor and working with local governmens to do our part”. No, that’s not what is happening. And workers who’ve been drawn into the area are sending their paychecks home to another state. Sure, you get an economic lift, but now that big box stores do the bulk of the business, even those profits go outside the state. Unless we wake up, we’re going to be left holding the bag as all the money “trickles up” to the corporate interests.
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Realist, while you may be correct in your description of of some of the economic aspects in western North Dakota, what you are describing has little to do with “trickle down” economics. Certainly you are not suggesting that the workers who are sending paychecks out-of-state are simply putting their money in a barrel and burning it. I suspect that they are buying cars, buying clothes, paying mortgages, sending kids to college and in general consuming products. Your post itself indicates that the businesses that are making a profit are turning around and compensating their employees. The fact that some income is leaving North Dakota has little if anything to do with trickle down economics. By the way, while there are some North Dakota residents that are “losers” as the result of the increased oil activity, there are a lot of North Dakotans who are benefiting significantly; it just happens to make for a better story to write about the grandma being kicked out of her apartment rather than the grandma who owns mineral interests and is making a fortune.
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I totally agree with you on that Robert. When I was there in the 80′s they did all that, and I’m not too sure where the money came from, but once the wells were capped the towns out there suddenly found themselves with a lot of bills and a whole ot of maintance for all that new building out there. I just remember a lot of resentment out there when they went to Bismarck asking for finiancial help from those who were willing to share the wealth in the good times, and there was a lot of opposition. When I was out there a lot of people really didn’t like the eastern half of the state because there was a feeling that everything political was generally geared for the eastern half and the west was always an after thought and had to fight for everything….
FMHA had also built a lot of homes and that had helped out during the boom, but after the bust there were all these abandoned homes that had to get moved so they auctioned them off…..A lot of them wnet for less than half price……And that made the locals who had homes next to those a little ticked off that their house lost value because they never threw in the towle but so many around them did.
You’d think they would have learned some lessons, but I’m guessing not a lot of those lessons have been acted on….
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