Measure 2 a wrong moveWASHINGTON — As a former North Dakota resident who still owns property in the state, I questioned the wisdom of wading into the debate regarding Measure 2, the property tax abolition initiative that will be on the ballot for the June 12 primary election.
By: Dale Thorenson, Agweek
WASHINGTON — As a former North Dakota resident who still owns property in the state, I questioned the wisdom of wading into the debate regarding Measure 2, the property tax abolition initiative that will be on the ballot for the June 12 primary election.
But then the supporters of the measure filed a lawsuit to prevent publically elected officials — those most knowledgeable about the measure’s negative effects — from talking about it. I certainly hope this audacious attempt to silence opposition fails miserably, and will motivate more to speak up publically. So please allow me add to the growing chorus.
Local to state control
When I initially heard about this measure, I thought it was a joke. It has to be the most ill-conceived piece of legalese to ever be put before the voters of North Dakota. Why on earth would anyone vote to transfer all local control of funding decisions from their locally elected officials — county commissioners, city councils, school boards, township supervisors, fire district officers, etc. — to the state legislature? And I mean all control, because every decision made by a local entity has to do with spending money for a service.
“Joe, I know you need gravel on that road by your place, and we’re trying to get the funds to pay for it from that Local Infrastructure and School Funding Committee that the legislature created to handle these things when we lost the right to use our local property tax base back in ’12. But they say there just isn’t enough traffic on that township road to justify spending state funds . . . Heck, they even questioned the need for regular snow plow service last winter!”
Measure 2 would require the state legislature to come up with a plan to replace the $850 million (2012 receipts) raised annually through property taxes with state funds. I dare say that anyone who has ventured into western North Dakota recently would agree that the state legislature already has more than enough items on its plate. And the legislature’s workload only will increase in the coming years as it (hopefully) begins dealing responsibly with the rapid development of the Bakken and all its King Midas ramifications.
It does not need, nor does it have the time, to be required to decide the “if, how and when” local entities provide needed services; decisions that are best left up to those who actually live there, and likewise, are elected by the people who also actually live there. I think these basic tenets can be found in a copy of “Good Government 101 for Dummies” for those skeptical of the wisdom of local control.
Better ways of tax relief
But beyond the logical pitfalls of Measure 2, let’s unpack this charade a little further. Backers of this power transfer from local to state control say property owners need relief from oppressive taxes, and mention the state’s excess oil revenue as a possible source for the funds. I won’t disagree that property taxes might be excessive in some jurisdictions, but there are better ways to provide relief without providing an unneeded windfall for others.
For instance, my siblings and I own the mineral rights on our family’s farm in Bottineau County, N.D., which has had a “stripper” oil well (three to four barrels per day) in production since 1980. Our combined oil receipts in 2011 on this small oil well were 16 times higher than the 2011 property taxes for the quarter of land the well sits on. One only can dream about how exponentially higher this equation must be for property owners (who still own their mineral rights) out west where the real Bakken play is taking place. I would guess that most would conclude that property owners with mineral rights in production are not in need of property tax relief.
But as I concurred, many property owners in some jurisdictions could use some relief. But frankly, many residents of the state who don’t own property really are in dire need of relief as they have been severely affected by the Bakken’s influence on their lives — skyrocketing rents, etc. Which brings up another question: Would apartment building owners reduce their tenants’ rent if property taxes were eliminated? But I digress.
So, if Measure 2 supporters want to use the state’s surplus oil money to abolish property taxes, even for those of us who need no relief, why wouldn’t it be much better public policy to instead provide every state resident who has paid state income taxes the previous three years some tax relief? (Moving to North Dakota and surviving three years of normal winters ought to be sufficient to earn native status.)
And if there isn’t sufficient oil revenue to deal with the Bakken development and offer meaningful relief for all, perhaps the state legislature could consider moving the oil extraction and severance tax up a few percentage points from the current 11.5 percent total and designating these funds for that purpose?
They certainly wouldn’t have to match Alaska’s current rate of 22.5 percent on net well profits established in 2007. A rate justified, I surmise, because the Alaskan climate is milder and the terrain on the North Slope more easily accessible than that of western North Dakota, making oil exploration there so much easier and less costly?
Finally, why would North Dakota voters want to give a nonresident such as me (and the Wal-Mart family, for that matter) a free ride by eliminating the property taxes we pay?
We don’t even suffer through the winters, so shouldn’t we at least help pay for a little snow removal? But seriously, this free ride would be rather costly, as local North Dakota government entities currently collect $126.8 million in property taxes from out of state residents such as me and companies such as Wal-Mart, about 16.7 percent of all receipts received.
I am confident that the majority of North Dakotans are much too wise to be hoodwinked by such a foolish scheme through the guise of a free lunch. However, this decision will be made on what is historically a low turn-out election — primary day.
A majority yes vote on this measure would have far-reaching negative effects for years to come. For that reason, and since I no longer have a vote in North Dakota state, I will be pestering everyone I know back in North Dakota on June 12 to go and vote no on Measure 2. And you should as well.
Editor’s Note: Thorenson is a native of Newburg N.D., and currently works in government relations on agricultural issues in Washington D.C.