Posted 2/01/12 (Wed)
By Neal A. Shipman
Thanks to the oil boom in western North Dakota, the state’s treasury is flush with cash. And being flush with cash is a good thing for government. It means that the North Dakota Legislature, in its infinite wisdom, will be able to fund our schools, social programs, maintain our roads, and in general, take care of the needs of the citizens of the state.
The one downside, however, of having so much money flowing into the state of North Dakota’s coffers is that there will always be special interest groups that will want to belly up to the trough and make sure that their special interests are taken care of regardless of the lasting impact of their wishes.
And that is already happening as proponents of two constitutional amendments are now poised to make sure that the state’s newfound wealth is spent on their pet projects. One measure, Measure No. 2, would completely do away with North Dakota’s property taxes and mandate that the state of North Dakota provide money, nearly $700 million a year, to cities, counties and schools from the general fund (oil revenue). The second measure, which is being pushed by wildlife and environmental groups, would take another five percent annually (or between $51 million and $84 million annually) of North Dakota’s tax revenues from oil production and extraction revenues to be used for any number of conservation and wildlife projects.
Obviously, there are people in the state who will vote to support these two measures. Since most people do not want to pay taxes of any sort, the chance to wipe property taxes out of North Dakota’s tax equation may seem like a very good idea. Likewise, most people would find it hard not to support more parks, wildlife areas or conservation in the state.
But the underlying problem with both of these measures is that the proponents fail to recognize a few key issues.
First, Measure No. 2, if passed by the voters in the June General Election, would completely rewrite North Dakota’s tax system which relies on property taxes to primarily fund city, county and other local government and our local school districts, while the state treasury is the major recipient of sales and income tax collections.
Without property taxes, the question that every school board, city council, township board or county commission, as well as the citizens of those entities should be asking is, “where are the funds going to come from to operate our form of local government, who is going to provide the funds for our teachers, our city and county workers, or pay for our roads and law enforcement?”
While that question isn’t really being answered by the backers of Measure No. 2, one would have to assume that the state of North Dakota and the Legislature will have to replace all of the property taxes that were once collected at a local level with state dollars. Which of course means that ultimately, local control would slowly shift to Bismarck. While property taxes do not fund a significant portion of the city, county or school budgets in McKenzie County, they are nonetheless an important revenue for our local government.
Second, and probably a bigger concern, is that these two measures both usurp the legislative process and completely remove our elected state officials from being able to decide how to spend the state’s money to best meet the needs of the state’s citizens.
Here in western North Dakota, which is feeling the brunt of the energy development, we are witnessing firsthand how our roads are being destroyed, how our law enforcement, ambulance and fire departments are being stretched to the breaking point, how our schools are bursting at the seams with new students, and how woefully inadequate our city and county water and sewage systems are to handle a growing population.
I was not a fan of the constitutional measure, which passed two years ago, and locked up hundreds of millions of dollars in oil revenues for 20 years. And I’m not a fan of these two measures either.
At a time when the entire infrastructure in western North Dakota is nearing collapse, North Dakota’s elected leaders need to have the flexibility and the ability to plow state oil tax revenues back into the areas that are being impacted the most.
The passage of these two measures would simply lock up more state money and further handcuff the ability of the Legislature to meet the needs of all of the citizens of the state.