Neither proposed tax measure is good for North Dakota agriculture
JAMESTOWN, N.D. -- While the rest of the nation faces economic uncertainty, North Dakota's economy is uncommonly healthy. Much of this is a result of a strong farm economy and the development of the Bakken oil field. As North Dakotans know, farmi...
JAMESTOWN, N.D. -- While the rest of the nation faces economic uncertainty, North Dakota's economy is uncommonly healthy.
Much of this is a result of a strong farm economy and the development of the Bakken oil field.
As North Dakotans know, farming and ranching is a boom or bust proposition. Severe weather events, unstable market prices and global economics all can cause farm income to crash. The bust years vastly outnumber the boom years.
Oil drilling and production has had its ups and downs, too, as anyone who lived in Williston, N.D., in the 1980s will tell you.
Against this backdrop, voters will be asked to decide two measures that directly deal with state tax revenue.
Measure 1 would create a new "permanent oil tax trust fund" for taxes from oil and gas development. The interest from this money would be transferred to the state's general fund. The principle would become "permanent" with one exception: If three-fourths of the lawmakers vote in agreement, up to 20 percent of the principle could be used. This may sound good; however, if one considers the unintended consequences, the measure's value becomes questionable. At today's interest rates, the revenue generated from the principle in the trust fund will be a minute fraction of the actual tax income generated. If Measure 1 passes, that money will be virtually unavailable to lawmakers to use now. We elect our lawmakers to use their best judgment to set the state's priorities and then get the job done using the state's resources. Those resources are public -- yours and mine.
North Dakota has many pressing needs, not the least of which are aging roads and bridges. This public infrastructure was built with tax dollars. Many miles of roads and numerous bridges are living past their projected life spans. We've been getting by using selective patching and deferred maintenance. This situation affects every county in North Dakota, from urban Cass to rural Williams.
I shudder to think that if lawmakers attempt to seek a three-fourths vote to use a limited share of the principle, one or two holdouts could wield disproportionate influence on what priorities would be funded first.
My conversations with farmers, ranchers, Main Street business owners and residents of the largest cities suggest Measure 1 could lock up the very "investment capital" we need to keep North Dakota's energy, agricultural and tourism industries on the road to prosperity.
Measure 2 also sounds good on the surface. This measure wants to cut state income taxes by 50 percent and corporate taxes by 15 percent, on average. North Dakota already has one of the lowest income tax rates in the nation. What could be wrong with cutting income taxes? If you pay property taxes -- plenty. While state government has "kept control" of income taxes, it has done so by raising user fees and reducing funding for numerous services, not to mention pushing more of the costs onto school districts, cities and counties. Local property taxes take a much bigger bite when they come due, as compared with state income tax. Should Measure 2 pass, I think any real effort to secure action on property tax relief will vanish overnight.
There are better ways for our Legislature and other elected officials to identify our real needs and address them by using the financial tools they ought to have available.
The North Dakota Farmers Union Board of Governors -- which is comprised of the presidents of all the county Farmers Union organizations across the state -- debated the pros and cons of Measures 1 and 2. These rural leaders then voted to recommend a "no" vote on both measures.
The need to take care of our problems has never been higher. Measures 1 and 2 leave too much doubt in my mind. I prefer to put my trust in the legislative process that can adapt to North Dakota's rapidly changing needs, rather than a "permanent" trust fund.
Editor's Note: Carlson, of Jamestown, N.D., is president of North Dakota Farmers Union.