House Tax Committee Hears Various Cap Proposals

The House Finance and Taxation spent Monday’s holiday reviewing five individual bills that proposed various caps and limitations on property values and taxes. Other than the prime sponsors, the bills had no one testifying in support, but well reasoned opposition from counties, cities, schools, realtors and home builders was presented.

1182 - Proposed a 3% cap on the growth of valuations. Minot Tax Assessor Kevin Ternes explained to the committee that this bill would create an unfair tax rates for property owners. Those living in a more expensive home in a highly desirable area would have a lower tax rate than a smaller home in an older part of town. NDACo Executive Director Terry Traynor said this bill if passed could result in the shift of burden from one class to another; from residential to agriculture and commercial parcels. Committee chairman Craig Headland told his committee, "over the years we have seen every type of cap bill, we have learned that any time you start messing with the calculation, you create inequities with property taxes and an unfair system."

1221 - Proposes to extend the length of time from when a tax bill becomes due and when the property is subject to forfeiture from three years to five. Cass County Auditor Mike Montplaisir explained how the current process works well. "For homeowners, when they are three years behind they can still recover. The further they get behind the harder it becomes for them to stay in their home." He explained how counties work with citizens to help them make installments or find other solutions to pay the delinquent taxes. A majority of the delinquent properties are developer lots. 

1261 - Would provide the profits from foreclosure sales to go to the property owner instead of the county. NDACo provided testimony illustrating how this would be complicated. "Counties lose money on most tax foreclosures. Excess proceeds help offset the costs incurred by counties for insuring, cleaning, and demolishing properties that owners have abandoned.   North Dakota county auditors have expressed concern that it will be a challenge to determine who should be paid the excess proceeds in instances where the owner on record has died; where there are judgments, liens, or mortgages on the property; if the owner is a partnership or corporation; or when the owner of record cannot be found," explained NDACo Research Analyst Linda Svihovic. 

1390 - Would freeze increases in property taxes "What pay in dollars last year, would be what you pay this year. If a taxing jurisdiction wants to raise taxes, it will need to be voted on by the people," said bill sponsor Representative Mike Schatz.

Traynor questioned the need for this bill, citing a report provided during the interim that revealed 47 of the 53 counties have lowered property taxes in at least one of the last two years and 13 counties have lowered in both. "County officials believe this would result in no property tax decreases - ever," said Traynor. "As an elected official could not know if the next year, or the year after, would involve a snow emergency, a flood, or a protest, it would only be prudent to never lower taxes to ensure that any potential need three, five, or fifteen years down the road could be met and the county board had not jeopardized their citizens."

1487 - Proposes a property tax freeze for seniors living in a home. The freeze would apply against property taxes levied on the first $400,000 of true and full value of a primary residence. NDACo testified in opposition of this bill, stressing how this would shift taxes to other property taxpayers. 

The House Finance and Tax Committee met later Monday to discuss and vote on the bills. They gave HB 1182, HB 1221, HB 1261 and HB 1390 Do Not Pass recommendations. They did not take action on HB 1487.