By: Bob Hale
January 19, 2019
In 2012, Measure 2, an initiated measure to constitutionally abolish property taxes in North Dakota, was soundly defeated by North Dakota voters. Opponents of the measure, lead by state legislators, acknowledged that property taxes were woefully out of control and needed to be “fixed”. They told voters to reject Measure 2 and they would fix the problems.
Six years later, the legislators announced they were unable to fix the property tax mess. During those six years the only thing that changed was massive increases in property taxes. For a fortunate few taxpayers their increases were only about 50%, but for most of us they have increased 100 – 300%. Tax assessors say there is nothing they, or we, can do about it.
At the same time, the state has squirreled away literally billions and billions of dollars in at least a dozen special funds. In response, taxpayers have exercised the only power they have– to vote down as many bond measures as they can.
The biggest losers are our K-12 schools. Taxpayers are so angry and upset with the irrational, irresponsible and uncontrolled increases of the taxes on their homes that they are rejecting a majority of property tax bond proposals for needed new schools. This is the only option we taxpayers have to try and control our ever increasing and never ending tax burden.
The same legislators who promised to “fix” the property tax mess, say that’s called “local control”. They claim when taxpayers vote down bond measures they are saying they don’t want needed schools.
HB 1525 was introduced this week. This Bill would accomplish two things. First, provide the largest real tax cut for North Dakota taxpayers in more than 20 years and see that we get our K-12 school needs when they are needed.
HB 1525 directs the School Land Trust Board to use some of the billions ($4.02 billion) the Board has invested in Wall Street securities and retire every outstanding K-12 school bond (this is between $850 Million and $1.2 Billion). It also directs the Board to oversee and fund all new K-12 schools directly and maintain these schools, putting the responsibility for this where the Constitution directs. The bonds you are now funding on your property tax bill would be gone for good.
No longer will our K-12 schools be funded with assessments against our homes. No longer will local school boards, superintendents, principals and teachers be forced to spend their time lobbying to pass school bonds. Instead they will be able to focus on teaching our children.
Since the money is already in the K-12 trust — and that trust is growing by almost $500 million annually — NO NEW TAXES will need to be levied.
The billions in the Common School Trust fund are being managed by Wall Street managers. In 2018 these fund managers were paid more than $18.3 million. Over the prior 7 years they were paid almost $100 million. The State finance office said management fees will soon be $25 million annually. Not a dime of these fees will ever be available for our K-12 schools.
The billions the Board has invested in Wall Street securities are at great risk. During the 2008-09 Wall Street market crash this fund lost, over a one week period, almost 40% of its value. It has taken 10 years to recoup that loss. Had those funds been used to pay for our schools we would have lost NOTHING.
Today we have more than $4 BILLION invested in Wall Street securities and more is being invested there each year. If we were to experience a similar crash as in 2008-09, we stand to lose over $1.5 billion.
If you want a REAL tax cut and to have our K-12 schools funded and maintained as the Constitution directs, call your State Representatives and tell them you want them to vote YES on HB 1525. If they won’t commit to vote YES, have them explain why.
North Dakota’s constitution states: Article VIII, Section 2: “The LEGISLATIVE ASSEMBLY SHALL provide for a UNIFORM system of FREE public schools THROUGHOUT THE STATE beginning with the primary and extending through all grades…”. Article X, Section 1: “The LEGISLATIVE ASSEMBLY SHALL BE PROHIBITED from raising revenue to defray the expenses of the state through the levying of a tax on the assessed value of real or personal property.”
To fund these mandates, our State was given 5 million surface and mineral acres of federal land at statehood. Those funds are managed by the School Lands Trust Board. Right now they are failing to use them for their stated purpose. The Legislative assembly is failing to meet its constitutionally mandated responsibilities to provide school facilities.
HB 1525 will correct these failings and while doing so give families and all taxpayers desperately needed tax relief.
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Robert (Bob) L. Hale is an attorney, an entrepreneur, a builder/developer, and is the founder of the Northwest Legal Foundation. Mr. Hale has a B.A. in Business Administration and a minor in Sociology from the University of Washington (Seattle) and a J.D. from Gonzaga University Law School in Spokane, Washington. He resides in Minot, North Dakota.