CHICAGO — Riding high on its record oil boom, North Dakota will consider a measure that would repeal property taxes and require the state to replace the local revenue.
The resolution will appear on the June 2012 primary ballot. It proposes eliminating property taxes throughout the state starting in 2012. The measure requires the Legislature to replace local government revenue with state tax revenue.
It does not address how the state would deal with bonds backed by current property taxes.
Lawmakers will review the proposal in a special legislative committee and hold a series of public hearings around the state.
Current proposals would have the state raise taxes on oil and gas production, as well as motor vehicle fees and the state lottery to replace the money.
Property taxes are the principal revenue source for local governments in the state. If enacted, it would mean the loss of $775 million to local governments annually based on recent years’ collections. Of that, local school districts got 41%, cities 28%, and counties 26%.
The state collects a 0.3% property tax that in 2009 resulted in $2.2 million. That money goes to the University of North Dakota’s medical school.
North Dakota’s strong economic position is due largely to the largest oil boom in its history. Oil production taxes are expected to generate $682 million over the next biennium.
The state is enjoying an uptick in nearly all of its chief revenue sources, including sales tax, oil taxes, and motor vehicle fees.
The proposal comes as many local governments, particularly those located around the Bakken oil field, the largest of its kind in the U.S., have complained that they need more support from the state to deal with the boom’s impact on everything from roads to schools.
In late April, lawmakers passed a fiscal 2012-13, $9.9 billion budget that features $500 million of tax cuts, including property taxes. The debt-free budget includes nearly $1 billion of infrastructure projects financed with cash and $1 billion of reserves.
A group called Empower the Taxpayer initiated the resolution and gathered nearly 30,000 signatures to get the measure on the ballot.
A similar bill failed in the 2009 legislative session and a similar petition failed to gather enough signatures to make it on the ballot last year.
North Dakota is rated AA-plus by Standard & Poor’s and Aa1 by Moody’s Investors Service.
