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 thirty-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.”
“Measure four takes away a lot of local control,” says Representative Jeremy Olson. “Property tax is the most transparent tax. It goes to local political subdivisions. The people who would benefit most from the measure don’t use the services property tax provides.”
So, what does this mean for our schools?
According to Dr. Steve Holen, Watford City’s Superintendent, “The challenge with the measure is the cost. We’d have to cut programs, but nobody knows what programs would be cut.”
“In my position as County Superintendent of schools, I’m looking out for all schools in ND,” says Nikki Johnsrud. “As is, schools are funded by a per-person payment. If we don’t have property tax, where is the money coming from for education?”
Schools are currently funded by the amount of students enrolled. If measure four passes, the school’s funding will be frozen at the funding for 2024. This means that five years from now, the amount of money schools receive will remain the same as this year, no matter how many more students enroll or how much inflation rises. This would mean bigger class sizes and fewer teachers, affecting the quality of education greatly.
This measure puts a lot more responsibility on the state government than local. “Micromanagement shouldn’t be at a state level,” says Representative Olson. “Locals know what they need more than those in Bismarck do. If Measure Four passed, it would change how the state runs dramatically. Our legislators are citizen legislators. If the measure passes, legislators will have to put more into the state than the people.”
So, if this measure has such negative effects, why is it being considered?
“Many people, including myself, believe that amongst the taxes, property tax is a fairly immoral tax. Private property is the foundation of a free society. The ability of the government to take away something that you should rightfully own is improper. I’m shocked at how much property tax is going up this year. It’s just crazy to me. Let’s call it wasteful unnecessary spending. We have a chance to take that away from state legislators and convert it to actual tax relief for citizens by eliminating the property tax,” said former representative Rick Becker in an interview with The Dakotan earlier this month. (For the whole article, click here.)
Unfortunately, according to Representative Olson, “property tax would still exist, it just wouldn’t be based on assessed value.” The likely scenario is that property tax would be instead based on square footage. So if you take a 2,500 ft^2 office building, fully furnished, and a 2,500 ft^2 warehouse, both would have to pay the same amount in property tax, regardless of how much they’re worth.
Furthermore, property tax has been around since colonial times (1796, according to eh.net). Currently, all 50 states in the nation enforce property tax. North Dakota would be the first state in the nation to abolish property tax, with an estimated loss of $3 billion.
“This has never been done before,” says Dr. Holen. “There’s a lot to figure out. The legislature would have less time to focus on other issues if they’re focusing on how to get this to work.”
“Why would we want to be the first in the nation to do this? North Dakotans pride themselves on being self-servient. When something needs to be done, we put our heads down and do it,” Says Nikki Johnsrud. “This is a sign we need to come to the table and work together.”
In the words of Representative Richter, “If it sounds too good to be true, look into it.” Make sure to make an informed decision before voting this November by doing your research!
Most information obtained in this article is from personal interviews over the phone with people in opposition to the measure due to their concern of the effects it will have on the state. There are multiple websites and videos both for and against Measure Four, including debates on BEK TV (BEK TV.com) and KFYR TV (KFYR TV.com).