Following yesterday’s news that the Minot City Council is now opposed to “caps” on property tax revenue as found in Governor Armstrong’s property tax plan, so too is the Fargo City Commission.
In the video above, the Fargo City Commission is hearing an analysis of HB 1176:
The sentiment in Fargo is similar to that in Minot: that caps just aren’t going to work for these cities because (1) they would have to simply figure out the math and (2) they would have to learn to live within the confines of the cap.
City Commissioner Dave Piepkorn says the state’s spending should be capped as well. As luck would have it, there is a bill for that. HB 1502 would cap state spending growth at 3% as well and reads as follows:
Except as otherwise provided in this section, the total general fund budget approved by the legislative assembly for a biennium may not be greater than three percent of the general fund budget approved by the legislative assembly for the previous biennium. If the general fund budget increase approved by the legislative assembly for a biennium is less than three percent compared to the previous biennium, the difference between the actual percentage increase and three percent may be carried forward for up to three bienniums and used to exceed the three percent increase limitation. This section does not apply to any general fund budget increase that exceeds three percent if the increase is approved by a two-thirds vote of members elected to each house of the legislative assembly.
In their discussions, it sounds like Fargo City Commissioners think the “cap” is on total city spending, when it is only on the total revenue generated by property tax.
The Fargo City Commission did not even mention that, under Governor Armstrong’s plan, they can go to the voters to increase that cap. Funny, they don’t want to mention that, because they want to demonize the very concept of reform. By omitting this fact, the Fargo City Commissioners at this meeting are doing a disservice to the discussion and their own citizens. They probably know their citizens won’t approve that kind of spending increase if they are given a chance to vote on it directly.
For his part, Governor Kelly Armstrong has reacted to the concern of Fargo City Commissioner Dave Piepkorn is a pretty funny way. From AM1100 The Flag:
“I could cap the state. I could get rid of the money for the Fargo airport, for the Red River water supply. I could get rid of the challenge grants for NDSU. I could get rid of the extra money for the homeless problem that exists. We could do that. I think Dave Piepkorn’s constituents would probably have a problem with that. We have to balance our budget every year. We could give Social Services funding back to the municipality. We could get rid of the the 80 percent we pay for K-12 education. I’ve learned a long time ago probably to not take criticism from people I wouldn’t take advice from,” Armstrong said.
Armstrong argues North Dakotans who have seen their property taxes increase don’t care if it’s a local or state issue.
“They’re angry and they want somebody to do something about it. We have proposed something that does something about it. Local elected officials don’t like this, but their constituents are going to love it,” Armstrong explained.
The audio of this exchange is on the AM1100 The Flag webpage.
The sarcasm in Kelly Armstrong’s voice is highly appropriate in this situation, and a communication style that he has always used that separates him from other politicians.
The State Cannot Limit Its Spending So Long As Local Governments Demand More And More And More
State budgets are out of control, and have been since 2007.
One of the primary reasons: limiting the growth of local property taxes with massive increases in state spending!
From 2003 to 2023, state spending in categorized as “assistance to political subdivisions” has gone from just over $1 billion in 2003-05 to just under $5.5 billion in 2023-25.
It is likely that after all these years of consistent explosive growth, local governments just feel they are entitled not only to the spending but the growth of the spending.
The legislature can’t limit state spending if they are increasing the amount that local governments receive by 500+% every 20 years.
This is exactly what former Governor Doug Burgum was illustrating when he pointed out that $7.5 billion had been spent just since 2007 specifically in the name of reducing property taxes.
We share and recognize the concerns about high property taxes and the burden they place on residents in some of our communities. I say some, and not all, because some communities have done a good job of limiting the property tax burden on their residents – a tangible reminder that property taxes are set and managed at the local level – cities, counties, schools, park districts and others.
This Legislature, and legislatures in many other states, have tried and nearly exhausted every option to address property taxes with state subsidies and valuation caps – almost always with unintended negative consequences and disappointing results. Here in North Dakota, from 2007 to today, 17 pieces of legislation have passed resulting in $7.25 billion of property tax relief.
Yet property taxes continue to rise in many communities, which reinforces the old refrain: If you want more of something, you subsidize it. And by continuing to subsidize property taxes, we’re growing local government.
If cities such as Minot and Fargo continue to make this argument, and legislators agree, it will cause Governor Armstrong’s plan to be scrapped entirely. The question then is whether either of the major alternatives (so far) can have a chance.
It’s pretty clear that Governor Kelly Armstrong, and legislators like Scott Louser, Ben Koppelman, and several others whom have offered real and substantive plans are serious about doing something about property taxes this time around.
The question is whether the legislature as a whole has the political will to stand up to local governments and their taxpayer-funding lobbyists and taxpayer-funded campaigning.
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