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Looking up at the North Dakota State Capitol building in Bismarck. (Image: Timothy Vogel via Flickr)
Looking up at the North Dakota State Capitol building in Bismarck. (Image: Timothy Vogel via Flickr)

North Dakota social funding eases local property taxes

BISMARCK, N.D. — A North Dakota legislative committee was told Tuesday that a partial state takeover of county social services costs is helping to ease the property tax burden for North Dakota residents, though some lawmakers believe declining oil tax revenues will prevent the state from assuming all of the program costs.

“I don’t know where the money is going to come from, quite honestly,” Rep. Mark Dosch, R-Bismarck, said of the estimated $150 million annual cost to the state to run all social service programs now funded by property taxes imposed in counties. “I think Christmas is over and I’m not sure we’re realizing that yet.”

Gov. Jack Dalrymple proposed the tax relief last year, with lawmakers transferring $23 million in state money to the state Department of Human Services to run some programs for counties during the current two-year budget cycle. The measure was part of a longer-term proposal for the state to take over the funding of all social service programs in time, after more study of the idea and the establishment of a funding formula.

Terry Traynor, assistant director of the North Dakota Association of Counties, told the Legislature’s Political Subdivision Taxation Committee that the legislation last year already has resulted in an estimated savings of about $10 million to counties.

“This is reflective of what happens when you cut their costs — they lower their mills,” Traynor said.

Counties, which can impose no more than 20 mills on property taxpayers, have been able to cut mill levies by an average of 2.8 mills to date, he said. A mill is a tax rate, which represents $1 in taxation for every $1,000 in taxable property value.

Following the bust of North Dakota’s last oil boom in the 1980s and during a time of a harsh farm economy, lawmakers began shifting the cost of social services programs — from food stamps to foster care — to the state’s 53 counties, which raised the money through taxes on property owners.

“The state did not have the money,” Dalrymple told reporters. “The only thing possible was to move taxation at the county level.”

Dalrymple believes the state still may be able to take over all funding of social services from the counties, though “it needs to be done in light of all the other needs we have.”

North Dakota’s financial picture is far less rosy than when Dalrymple proposed the idea more than a year ago. Overall tax revenues through November are $152.2 million less than projected for the two-year budget cycle that began on July 1, data show. Most of the drop comes from weakened sales tax revenue, which provides the biggest share of the budget for North Dakota government. And the decline in sales tax revenue is directly related to the decrease in oil rigs, which have dropped by two-thirds over the past year.

North Dakota’s Legislature does not meet again until January 2017. The interim legislative committee will make a recommendation for lawmakers to consider then whether to continue the transition for the state to fund social service programs.

In related news, Oil impact funds slipping as oil slides in North Dakota.

Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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