Local officials say maintaining operations will be challenging if property taxes are eliminated

JAMESTOWN — Local government leaders say maintaining operations will be a challenge if an initiated measure to eliminate property taxes is approved.

“I think property tax has been a consistent revenue source for schools,” said Rob Lech, superintendent of Jamestown Public Schools. “It would be relatively problematic to eliminate it.”

A committee headed by Rick Becker, a former member of the North Dakota House of Representatives from Bismarck, is currently gathering signatures to put the measure on the ballot in 2024.

“The short version is it takes high revenue the state has now to replace property tax revenue at 2025 levels,” he said. “Any additional revenue needs are in the control of the local government but any additional revenue needed must come from other sources such as fees or sales tax.”

Becker said fees, for example, could be set based on the number of people, the number of parcels or even the size of a parcel — any system other than the value of the property.

The North Dakota Legislature could be called on to create laws allowing some of these types of fees or expanding some other taxes such as sales tax which only cities, counties and the state can levy at this point.

“It would take the handcuffs off local leaders,” Becker said.

Rep. Craig Headland, R-Montpelier, called Becker’s plan a “misguided approach to government.”

“Rick Becker is under the delusion the state has the money to do this,” he said. “… it would take an increase in other taxes or the use of the Legacy Fund.”

Currently about 26.5% of the Jamestown Public School District’s total revenue comes from local property tax, Lech said .

“I haven’t analyzed the measure … ” he said. “I’m not sure how other fees could be set up. Significant changes would be required.”

Jamestown City Councilman David Steele said he was not in favor of the proposal.

“No one likes to pay taxes,” he said, “but we don’t want to rely on the state of North Dakota.”

The city of Jamestown currently receives 65% of its operating revenue from property tax, according to information furnished by Sarah Hellekson, city administrator. Property tax is the largest revenue source for the city.

“We in Jamestown are trying to be as efficient as possible,” Steele said. “People need to understand where their tax dollars are being used.”

Other revenue sources include licenses, court fees, sales tax and Jamestown Civic Center operations.

Steele said if a city was unable to raise additional money, it could result in deferred repairs and services.

Mark Klose, chairman of the Stutsman County Commission, said he had not researched the proposal at this time.

“I haven’t seen a whole lot of how it would work,” he said. “… I haven’t heard where the money would come from.”

Klose said he understands residents have a growing frustration with property taxes.

“The people I talk to are getting tired of these increases,” he said.

Becker said a committee of grassroots volunteers are circulating petitions at this time. The committee is required to have 31,164 signatures by June 29, 2024, to place the measure on the November 2024 general election ballot.

“We are doing pretty good,” he said. “We have a lot of people gathering signatures so we don’t have numbers yet.”

Becker said his committee’s goal is to gather 45,000 signatures in case some are disqualified.

One of the goals of the measure is to create a more equitable method of raising funds for local government, Becker said.

“Taxes based on valuation is actually taxing unrealized gains,” he said, referring to the fact property taxes increase with the value of the property even if the property owner has not sold the property.

Becker also said it would eliminate the need for people to sell property because the property tax has become unaffordable.

Klose said the alternative funding sources to maintain infrastructure and services are still unknown.

“I’d have to think long and hard before going along with this,” he said. “There is some work that needs to be completed before voting on this.”

Headland said a better approach to reducing property tax would be more careful scrutiny of local elected officials.

“Provide some transparency,” he said. “Give voters more information on who they want to vote for.”