Property tax reform: The problem

Last month, North Dakota’s voters rejected a measure to “Prohibit Taxes on Assessed Value of Real Property” by 63.5% to 36.5%. This does not mean that the problem of excessive property taxes and hikes has gone away.

My colleague, Kim Koppelman, has ably summarized the problem: “Property taxes have been increasing exponentially for many years — at rates much higher than inflation and incomes.” “Simply stated,” he writes, “just because someone bought a $60,000 home 40 years ago doesn’t mean that they can afford the taxes on a $400,000 home today…and it’s the same home!” Furthermore:

…many first and second-time home buyers are taking advantage of what many growing communities in the state offer — property tax abatements. These are significant discounts in property taxes, funded by local governments (read taxpayers) to spur growth in those communities. They’re typically offered on new housing for the first two years of home ownership in them.

Predictably, when the two years is up, and the incentives expire, and the homeowners realize what the taxes will be on their homes, many “For Sale” signs go up.

None of this went away with that “No” vote in November. If we don’t want to be refighting this battle every few years, real property tax reform will need to be enacted when legislators gather in Bismarck in January. Over the next couple of days, I’ll offer our suggestion.