Senate lawmakers weigh questions of fairness in North Dakota property tax debate

Members of a Senate committee debated meaningful versus equitable property tax reform during hearings for two bills that would drastically affect how property tax is collected in the state.

House Bill 1575, one of three bills advanced by the House earlier this session, would reduce property tax rates for residential, agriculture and commercial properties. Sponsor Rep. Robin Weisz, R-Hurdsfield, proposed an amendment Tuesday that would add centrally assessed properties, such as railroads, to be equitable across all property types.

“House Bill 1575 is a property tax relief bill that is simple, clean and it covers all of the property tax classes,” Weisz told members of the Senate Finance and Taxation Committee.

The bill under the amendment he proposed would reduce the residential property tax rate from 9% to 6.25% and the rates for agriculture, commercial and centrally assessed property would drop from 10% to 8.75%. 

The bill also would cap annual increases in a property’s taxable value at 3%. Any local taxing district could opt out of the cap for six years with approval from voters during a primary or general election.

Weisz said a competing property tax proposal that focuses on the primary residence tax credit disproportionately benefits the state’s more urban areas.

“This makes it more equitable,” he said. “The people that are supporting our local government with their property tax dollars should receive somewhat of an equitable relief.”

The bill received support from several agriculture groups. Another proposal, House Bill 1176, sponsored by Rep. Mike Nathe, R-Bismarck, focuses on increasing a tax credit for homeowners but does not address agricultural or commercial land.

Sen. Dale Patten, R-Watford City, asked during the hearing whether it was better to give meaningful tax relief or equitable tax relief.

“When we spread the dollars that we have available across so many different interests and so many different entities … in the interest of being fair, do we lose meaningful?” Patten said.

Weisz acknowledged that under his bill some homeowners may receive a smaller property tax cut than the $500 primary residence tax credit lawmakers approved in 2023. He added the $500 primary residence tax credit was only authorized as one-time funding.

Patten said he was worried that if relief is spread too thinly, when residents check their property tax statements, they may not find that relief adequate.

The push for property tax reform comes after voters initiated a ballot measure last year that would have eliminated property taxes based on assessed value. Though the measure failed, many voters now expect legislators to reduce property taxes this session.

Weisz’s bill would also increase the Homestead Tax Credit available for property owners and increase the state’s renters credit from $400 to $600, similar to House Bill 1176.

House Bill 1575 as approved by the House would provide citizens with about $703.2 million in property tax relief for the 2025-27 budget cycle, according to Tax Commissioner Brian Kroshus. That does not reflect the amendments introduced Monday. The bill would be funded with a combination of the general fund and Legacy Fund earnings.

The committee on Tuesday also discussed another property tax option, House Bill 1168, sponsored by Rep. Scott Louser, R-Minot. His proposal would use state funds to buy down a portion of property taxes that would have been levied by school districts, reducing property taxes for residential, commercial and agricultural land.

The bill would also limit local political subdivisions to increasing property tax levies by no more than 3% each year, not including school districts. Unused increases could be carried over one year.

“I think this bill is complementary and it’s not competing with other bills that the House passed to the Senate,” Louser said during the hearing. “This does maintain local control and has a relief valve, if needed.”

Taxing districts that want to exceed the limits imposed by the bill could put the measure to a primary or general election ballot for their voters to decide. 

In its current form, Louser’s bill is the least expensive of the three property tax proposals at an estimated $121 million, according to a Legislative Council fiscal note. 

However, he strongly recommended the Senate committee amend his bill to buy down a larger portion of school district property taxes, as he had initially proposed before House lawmakers reduced it. 

“Please listen to our constituents and provide substantial property tax relief and reform,” Louser said.

Representatives of political subdivisions testified mostly in favor of the property tax bills but some advocated for more flexible caps, such as tying the limits to inflation rates.

“We feel like that is a better way to give us some flexibility to meet the needs of the citizens in real time,” said Matt Gardner, executive director for the North Dakota League of Cities.

Gardner also suggested not requiring caps for cities with populations under 1,300.

Another amendment Louser proposed to the committee would tie local taxing districts’ caps to the consumer price index, plus 1% or 2%. 

No action was taken by the committee on either property tax reform bill.

House Bill 1176, backed by Gov. Kelly Armstrong, will have its committee hearing next week, according to Sen. Mark Weber, R-Casselton, chair of the Senate Finance and Taxation Committee.

House Bill 1176 would allow homeowners to claim up to a $1,450 annual primary residence credit. The bill also features a 3% cap on the amount local subdivisions could levy for property taxes. That bill would benefit North Dakota residents, while the other two bills would also benefit out-of-state property owners.

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