North Dakota Legislature narrows property tax reform bills as key deadline approaches

BISMARCK — North Dakota lawmakers have narrowed the field of property tax bills ahead of the session’s midpoint, with just seven of roughly 20 proposals still standing.

By early March, all Senate bills must pass to the House and all House bills must pass to the Senate.

The House and Senate have only passed one property tax bill so far this session, Senate Bill 2201, which simply seeks to make those who have their primary residences in trusts eligible for the primary residence tax credit passed during the 2023 legislative session.

This week alone, the Legislature shot down eight bills dealing with property taxes. Of those eight, five were killed during a late House session on Tuesday.

The late session followed a nearly hourlong discussion during the chamber’s normal session on amendments to House Bill 1176, which encompasses the governor’s property tax reform and relief plan, introduced by Rep. Mike Nathe, R-Bismarck.

The bill had been substantially amended in committee since its initial introduction. Notably, an amendment had been added that would allow voters to exclude their county or city from the levy increase caps proposed by the bill for a period of up to 10 years. The funding amounts to be appropriated from the General and Legacy funds were flipped so more funding would come from the Legacy Fund and less from the General Fund to pay for the bill’s proposed increase to the primary residence tax credit. Additionally, $50 million had been added to increase income tax relief for North Dakotans, according to Rep. Jared Hagert, R-Emerado.

All amendments to the bill were approved by the House chamber except for the $50 million for income tax relief. The bill was re-referred to the House Appropriations Committee but is expected to return to the floor this week to be voted on.

Gov. Kelly Armstrong said he was happy the bill is moving forward and did not have many qualms with the amendments. He said he understood that legislators were attempting to provide flexibility to smaller political subdivisions with the amendment to allow voters to exclude political subdivisions from levy caps, but thought there was an option to provide that flexibility which would be “a little more restrictive.”

“The fact that this conversation is top of mind and moving forward, it’s not stuck in the mud, that’s really important for how this process works to get to a result at the end,” Armstrong told the Tribune.

“A lot of people are putting a lot of hard work in,” he said. “I don’t have to agree with every single aspect of the legislation to know that everybody’s working hard to get a solid piece of legislation together.”

The culling of property tax bills created a heated discussion on the floor during Tuesday’s late session. Rep. Ben Koppelman, R-West Fargo, expressed frustration with the House Finance and Taxation Committee over its decisions on property tax bills this session. He said that it follows a trend over the past several sessions where the committee chooses one bill and piles all the ideas they like from other bills onto it.

“They’re piled into a single bill a lot of times. I think this session it might turn out to be two bills, but then they’ve been particularly harsh on everything else,” Koppelman said in an interview with the Tribune on Wednesday. “Since all these bills had different ideas, I think the body as a whole should really have a fair shake at deciding which is our preferred source … So that’s what I was being critical of.”

Koppelman was the primary sponsor of House bills 1390, 1353 and 1343, which together acted as competitors to House Bill 1176. He said he felt there were “much better options that died last night than what we have in House Bill 1176” but he was hopeful — if skeptical — that pieces from the deceased bills would make their way into whatever property tax reform bill is eventually signed by the governor.

Nathe said he disagreed with Koppelman and others’ assessment of the Finance and Tax Committee and felt the committee had done its job going through the many property tax bills to determine what works and what does not.

This sentiment was echoed by House Majority Leader Rep. Mike Lefor, R-Dickinson, who said the committee had done a “tremendous amount of work” on the property tax reform bills.

“I just believe the Finance and Tax Committee did a very good job of vetting all these different bills because they come from different angles,” Lefor said. “Quite frankly, I appreciate the work of all the representatives — and senators – that brought bills forward.”

Sen. Mark Weber, R-Casselton, who chairs the Senate Finance and Taxation Committee said he had not seen any bills that were direct competitors to 1176 come through his committee, but he had seen at least one bill, Senate Bill 2363, which would work in tandem with 1176 to provide some property tax relief for agricultural landowners.

Rep. Craig Headland, R-Montpelier, who chairs the House Finance and Taxation Committee, said there was one other bill left, House Bill 1575, that was a direct competitor to House Bill 1176. He said he felt 1575 would provide relief in an “easier and simpler” way than House Bill 1176, and would provide tax relief across multiple property designations including residential, commercial, and agricultural land.

Nathe said he felt House Bill 1176 had the most momentum of any property tax bill at this point in the session, especially with the backing of the governor.

Lefor and Armstrong both said they were happy with the progress made on property tax reform so far during the session and felt confident at this point that the Legislature would come away with a strong property tax relief and reform package by the end of it.

“I would say we’re really positive about the likelihood of getting a good piece of relief and reform at the end of the session,” Armstrong said. “Well, hopefully not the end, end. But … I don’t think pre-crossover is going to happen, nor should it. The longer you have momentum moving forward, the more you have stakeholders engage in real solutions to what they see as perceived problems.”