With session winding down, North Dakota lawmakers at roadblock on property tax bill

BISMARCK — The North Dakota Legislature did not gavel in Wednesday, April 30, instead spending the day hashing out the final bills of the session in conference committees, including the long-awaited property tax relief and reform legislation that lawmakers say is stuck.

In February, Gov. Kelly Armstrong said he was simply happy that even with changes made to House Bill 1176 he did not fully agree with, the bill was still moving forward. It was not “stuck in the mud.” Now, it appears the bill has finally been mired.

Rep. Mike Nathe, R-Bismarck, said the committee was “95%” in agreement on the bill during Wednesday morning’s conference committee meeting and brought up what he said was the last piece the Senate and House have to come to an agreement on: the “skin in the game” amendment.

“Let’s face it, there is one issue that is hanging out there,” Nathe said during the meeting. “We’ve talked about it very little and it’s kind of the elephant in the room and that’s the ‘skin in the game.’”

The “skin in the game” amendment was introduced by Senate Majority Leader David Hogue, R-Minot, in the Senate Appropriations Committee. The amendment would make it so no resident’s property tax obligation could reach zero. Instead, they would be required to pay at least 25% of their primary residence tax obligation.

Hogue has said that reducing the amount of property taxes a homeowner pays to zero would make it so they no longer have a stake in voting on proposed local property tax increases.

Opponents to the amendment say that local bond levies that would raise local property taxes would not be factored into the tax obligation used to calculate their primary residence tax credit. Meaning, they would still be on the hook for local bond levies and other property tax increases adopted by voters.

Nathe said in committee that he thinks it is “blatantly unfair” that 30,000 North Dakotans do not pay property tax but the “skin in the game” amendment would close the path to zero property tax obligation for other North Dakotans. About 20,000 of those are farmsteads that qualify for the farm residence property tax exemption, according to Nathe.

Sen. Mark Weber, R-Casselton, said that in the case of the farm residence property tax exemption, farmers are absolutely paying property tax. They are not paying it on their farmstead, but they are paying “significantly more” on their farmland, he said.

Nathe called this argument “apples to oranges” because the farmland produces revenue for them, making it more similar to a business asset. He equated it to him paying property taxes on his home and separately on his business and the land it sits on.

“We have to resolve this before we can move forward,” Rep. Glenn Bosch, R-Bismarck, told the Tribune Wednesday. “And unfortunately, this ‘skin in the game’ conversation carries over to other budgets right now.”

According to Bosch, the state Department of Transportation budget and the state treasurer’s budget are waiting on the bill to be resolved before they can move forward.

There have been 12 conference committee meetings trying to hash out the differences between the House and Senate versions of the measure, but the last four have been less than 10 minutes long and one lasted only four minutes.

The current version of the bill being discussed in committee would use Legacy Fund dollars to increase the primary residence tax credit to a maximum of $1,650 and cap the amount political subdivisions can raise levies at 3% a year.

With the committee stuck, there was discussion of other property tax relief and reform bills that have yet to be acted on, frustrating some members of the HB 1176 conference committee.

“I don’t think those are really options. Those other bills,” Bosch said in an interview with the Tribune. “I mean, we’ve got this bill in front of us. I think we’re a long way toward getting what we want to get accomplished with this bill, and those other bills just become distractions. We have to take action on those … We need to clear the deck so we can get done with the one we’ve got in front of us.”

Bekkedahl said that saving bills like this as an alternative to the primary vehicle for a piece of legislation is normal, but he called the practice “frustrating.”

“It’s a chamber-to-chamber issue,” Bekkedahl said. “It’s always been that way. It always will be that way. Those bills go away at some point if they’re no longer needed. But right now, without resolution to the primary bills, those bills are going to be standing there for some reason or another.”

Neither side has a clear idea of how the stalemate will come to a close but lawmakers say that movement on other bills might change the bargaining position of one chamber or the other, and the added pressure that comes as the end of the session approaches may force concessions.

“I want to make it very clear the Senate is not willing to concede at this time on the ‘skin in the game,’” Weber said during Wednesday morning’s conference committee. “I will make that very clear. We are not prepared to concede and I think everybody sitting here knows that.”

“Alright, well, if that’s the case, then we’re just going to adjourn until you are ready to make some movement,” said Rep. Craig Headland, R-Montpelier, chair of the conference committee on HB 1176.

It is unclear when the committee will meet again.