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North Dakota Property Tax Amendment, Measure 2 (June 2012)

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Property Tax Amendment
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Type:Constitutional amendment
Constitution:North Dakota Constitution
Referred by:Empower the Taxpayer Committee
Topic:Taxes
Status:Defeated Defeatedd
The North Dakota Property Tax Amendment, Measure 2 was on the June 12, 2012 statewide ballot in North Dakota as an initiated constitutional amendment where it was defeated.

Measure 2 proposed eliminating property taxes throughout the state, starting in 2012. The measure was proposed by a group called Empower the Taxpayer in March 2010 and approved for circulation by the North Dakota Secretary of State in late March.[1][2] Specifically, the measure required the legislature to replace local governments' property tax income with state tax revenue.[3] A similar proposal was rejected in 2009 by the North Dakota Legislature.[4]

On April 29, 2011 the Secretary of State Al Jaeger confirmed that supporters collected sufficient signature to qualify the proposed measure for the statewide primary ballot.[5]

Election results

The following are official election results:

Measure 2
ResultVotesPercentage
Defeatedd No131,90376.54%
Yes 40,438 23.46%

426 of 426 precincts reporting


Results via the North Dakota Board of Elections.

Text of measure

The measure as appeared on the ballot read:[6]

This initiated constitutional measure would amend sections 1, 4, 14, 15, and 16 of Article X of the North Dakota Constitution and repeal sections 5, 6, 7, 9, and 10 of that same article, eliminating property taxes, poll taxes, and acreage taxes, effective January 1, 2012. The measure would require the Legislative Assembly to replace lost revenue to cities, counties, townships, school districts, and other political subdivisions with allocations of various state-level taxes and other revenues, without restrictions on how these revenues may be spent by the political subdivisions.

YES – means you approve the measure as summarized above.

NO – means you reject the measure as summarized above.

Constitutional changes

See also: North Dakota Measure 2 (June 2012), constitutional text changes

Measure 2 would amend Sections 1, 4, 14, 15, and 16, and would appeal Sections 5, 6, 7, 9 of Article X of the North Dakota Constitution.

Fiscal note

This is the fiscal note prepared by the North Dakota Secretary of State's office:

"The fiscal note prepared by the Tax Department states the measure will repeal ad valorem property taxes effective January 1, 2012. The amount of property taxes that would be eliminated upon successful passage of the measure would total $812,225,000 for 2012. The estimated fiscal impact assumes the effective date of the measure would initially impact and repeal 2012 property taxes that would be due and payable in 2013. The estimated fiscal impact reflects only one year of the 2011-13 biennium. The impact for subsequent bienniums would reflect a two-year period. Based on the historical property tax growth of 7.7 percent, per year the estimated fiscal impact of the measure for the 2013-15 biennium would be $1.8 billion."[7]

Support

In November 2009, Robert Hale, a Minot, North Dakota resident announced that he was in the process of forming a committee, known as the Empower the Taxpayer committee, to propose the measure. According to Hale, the ballot language was similar to that of Rep. Dan Ruby's proposal during the 2009 legislative session. The proposed legislation called for amending the North Dakota Constitution to remove property taxes as a sources of state revenue.[8] The measure is also sponsored by Charlene Nelson of Casselton, North Dakota.

Supporters

Arguments

  • In response to arguments that removal of the property tax may lead to questions about other types of taxes that are intended as property tax substitutes, sponsors of the proposed amendment said that issue could be resolved by "specifying that some types of taxes are not based on their property value."[10]
  • Supporters of the measure also argued that eliminating property taxes may make the state more attractive to businesses, which may lead to increased revenue for the state. "This would remove the property tax disincentive across the state. I believe that we would see many industries taking a very, very serious look at this state as a place to settle," said Hale.[10]
  • Charlene Nelson, chairman of the sponsoring committee for the constitutional amendment, responded to concerns over the details of the amendment, specifically, what the phrase ‘legally imposed obligation' means, saying, "It is a constitutional measure. It can’t contain every single detail. The details are determined by statute. The constitution is the principle, the details are the law."[11]
  • In an article for the Grand Forks Herald, Brett Narloch, executive director of the North Dakota Policy Council, used data from a Beacon Hill Institute study on the effects of eliminating property tax in the state to highlight the measure's possible positive impacts on the state's economy. According to the study's findings, private employment would increase by more than 13,000, private investment would see an increase of $980 million, and there would be a $1,430 rise in disposable income per capita. The authors of the study believe the positive benefits, from eliminating property tax, to the private-sector economy are certain. Narloch further stated that the measure would create a fairer business climate, thus helping to diversify the state economy.[12]

Campaign contributions

The following information was obtained from North Dakota Secretary of State website.

PAC info:

PAC Amount raised
Empower The Taxpayer $21,760.41
Total $21,760.41

Opposition

Opponents argued that it is dangerous to "eliminate an entire source of revenue" and that the proposal is misleading. The proposal, they argued, may appear like a tax cut but may instead force other state taxes upward in order to compensate.

Opponents

State Chamber of Commerce President Andy Peterson spoke out against the measure saying, "This is an extremist measure and we think it should go away," Peterson said. "Can I say this any more directly? This is not the right thing for North Dakota."[13]

Arguments

  • In response to the proposed measure Wahpeton Finance Director Darcie Huwe said, "This will be monumental. Property tax is one way for local governments to kind of control their destiny, with their ability to raise bulk revenue to provide local services. And if we lose that ability or diminish that ability to raise local revenue that provides local services, I think you end up with a disconnect between funding and priorities." If property taxes were eliminated as a source of revenue, local governments would have to depend on the state to replace the source, said Huwe. "In what form and how would it come and would it be the same amount and what would control how much that amount would be... a lot of big unknowns that aren't necessarily defined in the proposed legislation," she said.[17]
  • According to Williams Count Auditor Beth Innis eliminating the property tax would have a serious impact on citizens and could cause an increase in sales taxes or income taxes in order to compensate for the lost revenue. In particular, Innis said she believes the elimination of property taxes would impact people with low or fixed incomes.[18]
  • North Dakota Public Instruction Superintendent Wayne Sanstead said, "It has ramifications that could be severe for certainly, I'd say, school districts, but all political subdivisions." Sanstead argues that the legislature has taken strides to reduce property taxes. "We're down around 30 percent now. It's a lot less than it was when I came into this office, and I'm happy about that, but the first is, to eliminate totally, that`s a whole different kettle of fish," said Sanstead.[19]
  • Rep. Charles Damschen said that he is concerned that voters may assume that the proposed amendment means a tax cut. Damschen argues that it may in fact force state taxes upward. "This really is not going to be a net tax cut, and if people believe that, or are told that, it’s really misleading. That revenue isn’t going to just appear (elsewhere) when we abolish property tax," he said.[20]
  • Fargo Moorhead West Fargo Chamber of Commerce President and CEO Craig Whitney said, "To eliminate an entire source of revenue for nearly 3,000 political subdivisions without an approved methodology to replace that funding is dangerous. Instead, we need to explore alternative, sustainable revenue sources in order to lower the tax burden on property owners."[21]
  • According to Keep it Local North Dakota arguments making the claim that abolishing property tax would lead to an increase in local control are false. The group contended that it could lead to a full time legislature because the burden of funding local governments would fall to the state.[22]
  • Brian Paulson, assistant fire chief for the Jamestown Rural Fire Department, presented concerns that volunteer organizations, like local fire departments, would have to lobby the Legislature for funding.[15]
  • Michael Leachman, an analyst for the Center on Budget and Policy Priorities in Washington, D.C., argued that eliminating property taxes will increase the state's dependency on a "fickle money source," in reference to the oil revenues the state collects and the increase in these revenues amendment supporters hope to create. Speaking to the Associated Press about a study done by the center, Leachman said, "That would leave the education of your state's children, your future workforce, vulnerable to a highly volatile industry."[23]

Campaign contributions

The following information was obtained from North Dakota Secretary of State website.

PAC info:

PAC Amount raised
Keep It Local North Dakota $579,140
Total $579,140

Media editorial positions

See also: Endorsements of North Dakota ballot measures, 2012

Opposition

  • The Minot Daily News argued against the measure in a May 19 editorial saying, "We're all for lowering property taxes, but Measure 2 is not the way to accomplish that goal. It's simply a bad idea."[24]

Polls

See also: Polls, 2012 ballot measures
  • A May 3-8, 2012 poll by Forum Communications revealed that 74% would vote against the amendment, while 26% would vote for it. A total of 500 likely primary voters were polled. The margin of error was +/-4.3%.[25]
  • An early-June 2012 poll by Mason-Dixon revealed that 70% would vote against the amendment, 21% would vote for it, and 9% were undecided. A total of 404 likely primary voters were polled. The margin of error was +/-5%.[26]
Date of Poll Pollster In favor Opposed Undecided Number polled
May 3 - May 8 Forum Communications 26% 74% 0% 500
Early-June Mason Dixon 21% 70% 9% 404


2012 measure lawsuits
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Initiative process

Lawsuit

Empower the Taxpayer, et al. v. Cory Fong, et al.

On Wednesday, February 15, 2012, Empower the Taxpayer and Charlene Nelson, chairwoman of the initiative campaign, filed a lawsuit against Tax Commissioner Cory Fong (R) and several other top public officials. The lawsuit claimed that these officials are using public money and resources to campaign against Measure 2 and, thereby, violating North Dakota laws that prevent public resources being used for political activity. Robert Hale, a member of Empower the Taxpayer, said, "Elected officials, government entities and organizations funded with taxpayer dollars are actively and intentionally engaged in lies, misrepresentations, deceptions, mischaracterization and fear-mongering." Fong responded to the allegations saying, "I think I was elected as tax commissioner ... to have comments and analysis of important measures that affect our tax system. This measure obviously impacts our overall tax system."[27]

On February 21 District Judge Bruce Romanick denied the plaintiffs' request for a court order telling public officials to stop speaking against the measure. Judge Romanick said the lawsuit provided no sworn statements that back up its allegations, statements which are needed to secure the court order requested.[28]

Judge Romanick set an April 3 hearing for the lawsuit.[29]

The lawsuit was thrown out by Judge Romanick on April 12. The decision was quickly appealed to the North Dakota Supreme Court.[30]

The state supreme court took up the case and heard arguments from lawyers during the week of June 4.[31]

  • Romanick's ruling can be found here.

Path to the ballot

See also: North Dakota signature requirements

2010 effort

Amendment supporters were required to collect a minimum of 25,688 valid signatures by August 4, 2010 in order to place the measure on the 2010 ballot.[8] However, if valid signatures were submitted after the August 4th deadline, the measure would have been placed on the June 2012 statewide ballot.[32] According to reports, supporters failed to file the required signatures by petition deadline day on August 4, thus failing to qualify for the 2010 ballot.

2012 success

Following the failure in 2010 to collect enough signatures the petition remained valid until March 29, 2011, thus allowing for supporters to attempt to place on the 2012 ballot. According to new census numbers, the minimum number of signatures needed to qualify increased to 26,904.[33]

Reportedly, supporters of the proposed measure submitted an estimated 27,800 signatures, giving Secretary of State Al Jaeger until April 29 to verify and validate the signatures.[34][35]

On April 29 Jaeger reported that the measure had more than 28,000 valid signatures thus qualifying the measure for the statewide ballot.[5]

Timeline

Calendar.png

The following is a timeline of events surrounding the measure:

Event Date Developments
Filing Mar 2010 Measure was proposed by Empower the Taxpayer and approved for circulation by the secretary of state.
Signatures Apr. 29, 2011 North Dakota Secretary of State Al Jaeger confirmed that supporters collected sufficient signatures.

See also

Articles

External links

Support

Opposition

Additional reading

Editorials

References

  1. KFYRTV,"ND Group Pushes to Abolish Property Taxes," March 17, 2010
  2. KXNet,"Tax petition," March 17, 2010
  3. Associated Press,"Measure would abolish N.D. property taxes in 2012," March 17, 2010
  4. Associated Press,"Measure to abolish ND property taxes approved," March 30, 2010
  5. 5.0 5.1 Associated Press,"Measure to abolish N.D. property taxes on ballot," April 29, 2011
  6. Measure 2 text, retrieved from Secretary of State, April 25, 2012
  7. North Dakota Secretary of State, "Fiscal Impact of Measures 2 and 3," accessed June 8, 2012
  8. 8.0 8.1 Minot Daily News,"To tax or not to tax," November 27, 2009
  9. Bismarck Tribune, "Republicans hold Measure 2 discussion," May 16, 2012
  10. 10.0 10.1 Associated Press,"ND property tax abolition backers challenged," June 22, 2011
  11. The Jamestown Sun, "Measure 2 opinions: Measure’s opponents worried by its details," May 9, 2012
  12. Grand Forks Herald, "Brett Narloch, Bismark, column: Measure 2 would fuel tremendous growth," April 24, 2012
  13. Bismark Tribune, "Group outlines opposition to Measure 2," February 1, 2012
  14. WDAY "Former ND Governor Schafer speaks out against Measure 2," April 16, 2012
  15. 15.0 15.1 The Jamestown Sun, "Weigh in on 2: Lawmakers, officials say Measure 2 unworkable," May 15, 2012
  16. WDAY "Measure 2 opponents say bill is a big risk for North Dakota," May 17, 2012
  17. Wahpeton Daily News,"Measure could reduce city funding, services," May 19, 2010
  18. Williston Herald,"Questions linger on proposal to abolish property taxes," May 24, 2010
  19. KFYRTV,"Lawmakers Debate Abolishing Property Taxes," July 26, 2011
  20. The Jamestown Sun,"Assessments could replace property taxes in N.D.," August 16, 2011
  21. ValleyNewsLive.com,"The Chamber opposes ND property tax elimination," September 22, 2011
  22. Bismarck Tribune, "Measure 2 draws nation’s attention," April 28, 2012
  23. Associated Press, "Study calls ND property tax abolition 'risky'," May 16, 2012
  24. Minot Daily News, "Measure 2 should be rejected," May 19, 2012
  25. Forum Communications Co. "North Dakotans lean heavily 'no' on Measure 2," May 14, 2012
  26. KFYR-TV "Primary Election Poll: Measures 2 and 4," June 11, 2012
  27. Associated Press, "Lawsuit: ND officials lying about tax measure," February 16, 2012
  28. Associated Press, "Judge won't muzzle North Dakota property tax measure foes," February 21, 2012
  29. Businessweek, "Hearing planned on ND property tax lawsuit," March 23, 2012
  30. Associated Press, "Lawsuit on N.D. property tax measure to be appealed," April 14, 2012
  31. Dickinson Press, "Supreme Court hears appeal of tax measure suit," June 6,2012
  32. KFYR-TV,"Green Light Given for Property Tax Petition," March 29, 2010
  33. Associated Press,"Ballot measure to abolish ND property taxes still seeking last-minute signatures," March 28, 2011
  34. Associated Press,"Amendment would abolish property taxes," March 26, 2011
  35. Assoctiated Press,"Property Tax Amendment Goes to ND Secretary of State," March 28, 2011