North Dakota Senate advances property tax relief backup plan

A property tax reform bill viewed as an alternative in case the primary measure fails passed the Senate unanimously Friday, putting pressure on a proposal supported by Gov. Kelly Armstrong to cross the finish line.

House Bill 1168 was amended to mirror many of the provisions in House Bill 1176, the bill sponsored by Rep. Mike Nathe, R-Bismarck, that Armstrong supports.

“It’s a very good bill and it’s there if (House Bill) 1176 fails,” said Sen. Mark Weber, R-Casselton. “Everything is ready to go here in (House Bill) 1168 and it contains significant relief along with our preferences from the Senate as to what needs to be included.”

North Dakota Senate advances property tax credit but plan differs from House

House Bill 1168 includes a primary residence credit of up to $1,650, an expansion of the homestead property tax credit, up to $600 for a renters rebate and an expansion of a disabled veterans property tax relief program.

The bill also includes a “skin-in-the-game” provision requiring primary residence owners to pay at least 25% of their property tax bill. Each primary residence would receive at least $500. Another provision urges lawmakers in the 2027 session to look at providing relief to other property types, such as commercial, centrally assessed, agricultural land and other residential property. 

In total, the bill is expected to provide more than $511 million in relief for the biennium, according to the most recent fiscal note provided by Tax Commissioner Brian Kroshus.

The bill also includes similar 3% caps, which would limit local subdivision increases on property tax levies. Weber added, if the property valuation increases outpace the 3% cap, House Bill 1168 includes language to support school districts by making up the difference through the school funding formula to make their budgets whole.

Sen. Judy Lee, R-West Fargo, told lawmakers the large price tag for the bill is worrying especially at a time when the federal government is debating to reduce its cost share of Medicaid expansion payments to the states.

“If they change the federal match for Medicaid and Medicaid expansion, we are in big trouble,” Lee said. “It could be up to $330 million that the state will not get from the feds.”

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Sen. Brad Bekkendahl, R-Williston, chair of the Senate Appropriations Committee, said the Senate Appropriations Committee disagreed with Kroshus on the number of people that will use the new primary residence credit.

He said March 31 was the deadline to apply for the primary residence credit and about 143,000 North Dakota homeowners applied, which is less than 165,000 that were deemed eligible.

“We felt that the numbers in the fiscal note were inflated to a point where we actually took $70 million off on our calculation from these numbers … based on the number of homes we think will be actually paid the credit,” Bekkedahl said. 

House Bill 1168 will be returned to the House for its consideration of the Senate changes to the bill. If they do not agree with the changes, the bill differences will be resolved in a conference committee.

House Bill 1176, meanwhile, is in a conference committee, with the “skin in the game” provision a major point of contention between the House and Senate.