Every two years, November is a flurry of action with Election Day. This year, there are several new measures proposed in North Dakota as amendments to the state constitution. While each of these measures has its own set of benefits and challenges, measure #4 stands out as the one that will affect schools the most.
Measure #4 directly states: “This initiated measure would amend sections 1, 14, 15, and 16 and repeal sections 4, 5, 7, 9 and 10 of Article X of the North Dakota Constitution. It would prohibit political subdivisions from beyond the two and one-half percent limit and a school district, by a majority vote, could increase the indebtedness of the school district two and one-half percent beyond the two and one-half percent limit. It would allow an incorporated city, without regard to the existing indebtedness of the city, to become indebted in an amount not exceeding two percent of its full and true value for water and sewer projects. It would require a political subdivision incurring indebtedness to provide for annual revenues to pay the debt payments when due and would prohibit a political subdivision from issuing general obligation bonds secured with levying any tax on real or personal property except for the payment of bonded indebtedness incurred before the end of the 30-day period following the date this amendment was approved by the voters, until such debt is paid, and would require the state to provide replacement payments to political subdivisions of no less than the amount of tax levied on real property during the 2024 calendar year. It would limit the debt of a political subdivision to an amount not to exceed two and one-half percent of the full and true value of the real property in the political subdivision, except that an incorporated city, by a two-thirds vote, could increase the indebtedness of the city one and one-half percent tax levied on the assessed value of property on or after January 1, 2025.” (Ballotopedia, 2024).
So, what does this measure mean? Essentially, it removes property tax based on assessed value. Property tax provides the state $3.15 billion biannually, about one-sixth of the state’s budget. Over 30% of the revenue provided by property tax comes from large out-of-state businesses, such as Oneok, which pays around $19 million biannually- $8 million in McKenzie County alone.
“What Measure Four does is put in the State Constitution that state subdivisions cannot use assessed value for property tax and assigns the responsibility of the state of North Dakota to pay political subdivisions the equivalent of whatever the 2024 political tax is,” said Senator Dale Patten on Tuesday. “1/3 of the people who would be receiving the tax relief are based out of state.
Most homeowners pay around $2,000 a year in property tax. Yet, only 15% of property tax revenues come from individual homeowners.
“Of the top 25 property taxpayers in McKenzie County, only one has a McKenzie County address. Only three have an address in North Dakota.” Senator Patten explains. “The people in support of the measure say that the state needs to cut back on spending, but the state has a very strict budget. Cutting back on spending would mean cutting back on services.”
Biannually, the state has around $19.6 billion. $6 billion is provided by the federal government for specific purposes determined by the national government. $7 billion is special use funds, which also have specific purposes, including college tuition, hunting licenses, and roads. That leaves $6 billion in the general funds, which are funds generated by taxes. If the measure passes, that money is cut in half.
“We don’t have $3.2 billion lying around,” says Representative Richter. “Nobody likes property tax, but local property tax pays for local services.”
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