Holmberg: Property tax relief remains a top priority for state lawmakers

May 15, 2017

Sen. Ray Holmberg (R-Grand Forks), chairman of Senate Appropriations
Credit ND Legislature

The chairman of the Senate Appropriations Committee says the Legislature continues to put a high priority on property tax relief.

Sen. Ray Holmberg (R-Grand Forks) said all you have to do is look at the percentages of state expenditures that go towards keeping property taxes down.

In a memo to Holmberg, the Legislative Council said in the 2015-2017 biennium, the state provided $1.313 billion in property tax relief – or  about 21.8 percent of the state’s general fund budget.

"Nex biennium, even though the total amount of dollars in the budget dropped substantially, the percentage of the state's general fund going to property tax relief went up to 30.6 percent, " Holmberg said. "It's quite a change."

The Council's memo said the 2015-2017 appropriation was $6 billion. The Legislature has approved $4.4 billion for 2017-2019. And the amount going to property tax relief is $$1.362 billion.

(The memos -- converted from .pdf files to text files --are posted at the bottom of this article.)

In the next biennium, the state takes over full funding of county social service programs – replacing  the 12 percent buy down formula. Holmberg said the impact on counties will be different because of that funding takeover – because county mill levies for social services range from 4 mills to the maximum allowed 20 mills. But he sais it is inevitable that local property taxes will be going up.

"The counties with the higher property tax mill levy for social services will see less of an increase in local property taxes," Holmberg said. "But at the end of the day, property taxes will go up."

But Holmberg said this is permanent property tax relief and reform. And he said it also allows the state Human Services department to try to find efficiencies in service delivery.

Here are the Council memos:

17.9731.01000 Prepared for Senator Holmberg

ESTIMATED PROPERTY TAX RELIEF - 2015-17 AND 2017-19 BIENNIUMS

North Dakota Legislative Council May 2017

The schedule below identifies estimated funding approved by the Legislative Assembly for property tax relief programs during the 2015-17 (original amounts) and the 2017-19 bienniums. 2015-17 Biennium

2017-19 Biennium

K-12 education funding for mill levy reduction (estimated)

$988,000,0001

$1,131,000,0001

12% property tax relief credit

250,000,000

0

County economic assistance and social services financing pilot program

0

160,700,0002

Homestead tax credit

20,000,000

14,800,000

Disabled veterans tax credit

7,678,000

8,110,200

State funding of certain county costs of child welfare and SPED services

19,300,000

23,300,000

County emergency human service mill levy grants

3,900,000

0

State funding of clerk of court costs formerly paid by counties

24,603,806

24,166,012

Total

$1,313,481,806

$1,362,076,2122

Total general fund appropriations - original

6,026,162,678

4,309,499,033

Transfer from the tax relief fund for county takeover costs

0

134,700,000

Adjusted general fund appropriations

$6,026,162,678

$4,444,199,0332

Property tax relief as a percentage of general fund budget

21.8%

30.6%

1This amount is an estimate based on the value of 115 mills statewide. The 2013 Legislative Assembly discontinued the mill levy reduction grant program that had provided property tax relief in the 2009-11 and 2011-13 bienniums. In 2013 the Legislative Assembly approved the integration of property tax relief into the state school aid funding formula to provide for a mill levy buydown totaling 125 mills, 50 mills more than the previous biennium. The changes made in 2013 allow school districts to levy an additional 10 mills for general fund purposes; therefore, the mill levy reduction estimate used in the calculation above is 115 mills (125 mill buydown less the 10 mills of additional general fund levy authority).

2Includes $134.7 million from the tax relief fund.

    

17.9729.01000 Prepared for Senator Holmberg

12 PERCENT PROPERTY TAX RELIEF CREDIT PROGRAM

North Dakota Legislative Council May 2017

This memorandum provides information on the 12 percent property tax relief credit program which was created by the 2013 Legislative Assembly. In 2013 Senate Bill No. 2036, the Legislative Assembly created North Dakota Century Code Section 57-20-07.2 to provide a state-paid property tax relief credit of 12 percent. The 12 percent credit applies to the taxes levied by all taxing districts against property taxes and mobile home taxes. The Tax Department calculates the credits and certifies the amounts to the State Treasurer. In each year of the biennium, the State Treasurer distributes 75 percent of the credits to counties and taxing districts in April and distributes the remaining portion of the credits in June.

2013-15 BIENNIUM

Senate Bill No. 2036 (2013) appropriated $200 million from the general fund to the State Treasurer for the state-paid property tax relief credit program during the 2013-15 biennium. In June 2015 the State Treasurer requested a line item transfer of $500,000 from the township allocation line item ($8.76 million appropriated from the general fund in 2013 House Bill No. 1358) to the property tax relief credit line item to provide total funding of $200.5 million for the state-paid property tax relief credit program during the 2013-15 biennium. The actual tax credits during the 2013-15 biennium totaled $200.4 million.

The actual tax credits of $200.4 million reflect 2.9 percent of the total general fund appropriations for the 2013-15 biennium, which were $6,879.7 million. The total general fund appropriations amount reflects deficiency appropriations approved during the 2015 legislative session.

2015-17 BIENNIUM

Senate Bill No. 2005 (2015) appropriated $250 million from the general fund to the State Treasurer for the state-paid property tax relief credit program during the 2015-17 biennium. After the August 2016 special legislative session, the appropriation to the State Treasurer for the state-paid property tax relief credit program decreased by $16.6 million, from $250.0 million to $233.4 million. According to estimates by the Tax Department and the State Treasurer's office, the estimated tax credits for the 2015-17 biennium will total $241.5 million. House Bill No. 1024 (2017) provides a deficiency appropriation of $8.1 million from the strategic investment and improvements fund to provide total funding of $241.5 million for the state-paid property tax relief credit program during the 2015-17 biennium. The actual credits in fiscal year 2016, the 1st year of the biennium, totaled $116.8 million, and the tax credits are anticipated to total $124.7 million in the 2nd year of the biennium.

The estimated tax credits of $241.5 million reflect 4.2 percent of the adjusted total general fund appropriations for the 2015-17 biennium, which are $5,687.3 million. The total general fund appropriations reflect the budget reductions approved during the August 2016 special legislative session and deficiency appropriations approved during the 2017 legislative session.