North Dakota overwhelmingly votes to keep property tax

This week voters in North Dakota made history, defeating a ballot measure aimed at repealing all property taxes in the state. Measure 2, which would’ve imposed a constitutional ban on property tax, was opposed by 77% of voters.

Measure 2 was spurred by the recent economic success of North Dakota’s oil industry. According to an article from The Pew Center for the State’s Stateline, crude oil production has quintupled in the last five years. The state now ranks second in crude production, trailing only Texas, a state with over 37 times the population.

This huge economic boom has caused a major windfall for the state budget. Current general fund appropriations for the 2011-2013 biennium sit at $4.1 billion, up over 60% since from $2.5 billion during the 2007-2009 biennium. This rapid increase in revenues is predicted to turn into a $1.5 surplus in reserves when the state ends its biennium in July 2013.

Proponents of Measure 2, led by anti-property tax coalition Empower the People, cited the state’s large surplus in the state budget, coupled with increased land values due to the oil-boom, as reasons to support the proposed ouster of property tax. Charlene Nelson, chair of Empower the People, stated many North Dakotan’s property tax expense is outpacing their income growth. Proponents claimed the state’s sales tax and oil and gas surplus, distributed as block grants to cities, could replace the lost income from property tax

Opponents of the measure argued that moving away from property taxes, a historically stable source of revenue, would prove too risky for North Dakotans. State Tax Commissioner Cory Fong stated in a June 7^th Fargo-Moorhead INFORUM article, that the state would have to come up with over $800 million per year to replace repealed property tax if Measure 2 passed. According to analysis from the Center on Budget and Policy Priorities, 45% of those property taxes go to fund the public school system, while an additional 30% fund criminal justice and other county services.

The coalition opposing Measure 2, which included the North Dakota Chamber of Commerce, former Gov. Ed Schafer, the North Dakota Public Employees Association, and several counties and cities, was the largest public policy coalition formed in the state’s 122-year history.