Some city leaders in North Dakota concerned by governor’s tax plan, but Grand Forks mayor stands with it – Grand Forks Herald

Some city leaders in North Dakota concerned by governor’s tax plan, but Grand Forks mayor stands with it – Grand Forks Herald

GRAND FORKS — Some city leaders in places like Fargo and Minot are coming out against a proposal by Gov. Kelly Armstrong to reduce North Dakota property taxes, showing particular concern about the governor’s call for a 3% cap on local taxing.

In Grand Forks, however, Mayor Brandon Bochenski remains a proponent of House Bill 1176, as well as its proposed taxing cap.

“It’s such a benefit to the local economy,” Bochenski said this week. “I think even if people are unsupportive of the plan, they still support the general idea of it.”

Whereas the Grand Forks City Council has not voted on an official stance, Bochenski confirmed that “the mayor of Grand Forks is backing the proposal.”

And in Bismarck, Mayor Michael Schmitz said city leaders are “not taking a hard stance one way or another.”

Speaking on a personal level and not on behalf of other Bismarck leaders, Schmitz believes 3% is “a little low,” and is concerned it might not always cover the rate of inflation.

He said city leaders “are probably supportive of a cap. We’d certainly like to see the level be something different, but we’re not going to, probably, hard-line anything.”

During his State of the State speech earlier this month, Armstrong unveiled his comprehensive property tax reform plan, which includes:

  • Putting a 3% annual cap on local-level property tax budgets. If the entire 3% increase isn’t used, the remainder can be carried forward for up to five years.
  • Using $310 million in general fund money to double the primary residential credit amount from $500 to $1,000 per year.
  • Creating a primary residence classification, so “this relief will become automatic and not require homeowners to file for a credit,” he said.
  • Using a dedicated stream of earnings from the Legacy Fund — North Dakota’s growing savings account that is derived from oil and gas extraction taxes — to provide additional funds to the primary residence credit. He said the stream will grow as the Legacy Fund grows, giving all homeowners “a direct stake in the overall success of the Legacy Fund.”

A release from Armstrong’s office called it “a path to zero property taxes within the next decade.”

But the 3% cap is proving to be a hurdle for some. In Fargo, for instance, the concern is that it could hamper the city’s ability to address growing infrastructure needs,

The Forum reported

. The issue sparked during a meeting of the city’s Finance Committee.

“They want to cap us at 3%, they want to cap the county at 3%, but they don’t want to cap themselves at all,” said Fargo City Commissioner Dave Piepkorn. “To me, that’s obviously hypocritical. We need to oppose this as strongly as possible because this … would be catastrophic.”

In Minot, the City Council voted to pen a statement that formally opposes any caps on budget and property taxes, according to a Jan. 21 report by KFYR-TV. The vote was 6-1 to oppose the governor’s plan; one city alderman went to Bismarck to testify against the governor’s proposal.

During a House Finance and Tax Committee hearing last week in Bismarck, Tony Grindberg of the Cass County Commission spoke against HB 1176.

“With respect to the implementation of property tax caps, Cass County respectfully submits that this is a discussion that should be well informed and based measurable data. Counties throughout the state of North Dakota are unique in many ways and have varying budget demands,” Grindberg wrote in a submitted letter that accompanied his testimony.

Seventeen people gave testimony that day. A majority spoke in favor of HB 1176, although not everybody represented a taxing entity or specifically discussed the implications of the proposed 3% cap.

Representatives from the city of Mandan and the Fargo School Board spoke, but their testimony was listed as neutral.

Brandon Bochenski.jpg

Mayor Brandon Bochenski

Contributed/City of Grand Forks

At the city level in Grand Forks, the concern doesn’t appear to exist. During a City Council meeting Tuesday, Finance Director Maureen Storstad gave a brief presentation that began with an acknowledgment that she generally would prefer no caps, “but when I look at a 10-year history, I guess it makes me feel better,” she told council members.

Only twice in the past 10 years has Grand Forks seen more than a 3% increase, Storstad said. Over that span, Grand Forks’ property tax increases have averaged 1.95%.

“When you take out growth and just look at valuation, this is how we have averaged over the last 10 years,” she said.

The provision within HB 1176 to carry forward a portion for up to five years helps too, she said.

“I think what they have done in the bill to help with concerns like I have had in the past with that cap is there is a five-year rollover. You can bank it if you are under 3% one year and use it the (needed year),” she said during her City Council report. “In this history, we would have been fine because we would have been able to bank and then use it.”

She said she is still seeking clarification on some of the bill’s other points, including “how we back our special assessment bonds with property tax and how that is impacted with this bill.”

No members of the council offered comments or opinions after Storstad’s presentation on HB 1176.

Armstrong spoke often about property tax reform in the months leading to the election. In September, he declared property taxes the state’s “No. 1 issue” and urged that changes come from the Legislature, rather than through the ballot box.

On the same day as his election came the defeat of Measure 4, which sought to end North Dakota property tax payments as they currently exist, leaving the state to cover the current rate going forward. Had it won, it would have required the Legislature to find replacement funds.

The measure did not pass, however, with 63% of election participants voting against it. Its failure led to Armstrong’s plan — a state counterproposal, of sorts.

As Piepkorn, of the Fargo City Commission, calls it “catastrophic,” Bochenski believes some of the concern might come because different cities in the state have different funding mechanisms and circumstances.

“The only thing is we’re tracking general obligation bonds — we don’t want interest rates to go up. We haven’t been able to get any information on that one way or another,” Bochenski said.

But, he said, “property tax reform needs to happen and I don’t think it will happen without a cap.”

As HB 1176 makes its way through the legislative process, Bochenski said it’s important for others to give their perspective.

Schmitz, the Bismarck mayor, has done just that.

“I have shared (inflationary concerns) with delegates and the governor, but they had to start somewhere, so we’ll see where it goes,” he said.

Korrie Wenzel

Korrie Wenzel has been publisher of the Grand Forks Herald and Prairie Business Magazine since 2014.

Over time, he has been a board member of the Grand Forks Region Economic Development Corp., Junior Achievement, the South Dakota Historical Society Foundation, United Way, Empire Arts Center, Cornerstones Career Learning Center and Crimestoppers.

As publisher, Wenzel oversees news, advertising and business operations at the Herald, as well as the newspaper’s opinion content.

In the past, Wenzel was sports editor for 14 years at The Daily Republic of Mitchell, S.D., before becoming editor and, eventually, publisher.

Wenzel can be reached at 701-780-1103.


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