DEM-NPL Legislators Emphasize Property Tax Relief, Offer Contingency Plan for Capital Projects

DEM-NPL Legislators Emphasize Property Tax Relief, Offer Contingency Plan for Capital Projects

In response to revenue forecast DEM-NPL legislators emphasize property tax relief, set forth contingency plan for funding capital projects, call House-passed proposal to take $712 million off the books this biennium “flawed”

(BISMARCK, N.D.) – On the heels of the March revenue forecast by Moody’s Analytics yesterday, Dem-NPL legislative leaders and appropriators called for prioritization of property tax relief over proposed cuts to the corporate and personal income tax and also set forth a contingency budgeting bill to fund key capital construction projects. The legislators further called on the Senate to scrap a House proposal that would create a new fund in 2017, thereby taking $712 million off the books this biennium.

“The sky isn’t falling in North Dakota, but we nevertheless have to prioritize if we are going to properly fund state government for the next two years,” said Representative Ron Guggisberg. “The people want property tax relief, and we have the means to give it to them. But to do that and balance the budget, we should set aside the GOP proposals to cut corporate and personal income taxes.”

The Dem-NPL legislators specifically pointed to the need to continue the 12 percent property tax credit established last session and renewed pledges to deepen this relief through state funding of county social services. Earlier this session, GOP senators pared back the 12 percent property tax credit to 11 percent, which would offset any property tax relief realized through local county social services savings.

In contrast to the Dem-NPL focus on property tax relief, the GOP majority in the legislature has advanced various bills to reduce corporate and personal income taxes. For instance HB 1223, currently before the Senate Finance and Taxation committee, would reduce these taxes by $152 million. SB 2349, which is presently in the House Finance and Taxation Committee, would likewise cut corporate and personal income taxes by $125 million. Importantly, the budget conclusions set forth by Moody’s Analytics during yesterday’s revenue projection presume no further corporate or personal income tax reductions by the legislature.

Following through on promises to budget for contingencies in light of shifting revenue forecasts, Senator Tim Mathern of Fargo, a member of the Senate Appropriations Committee, today unveiled a delayed bill to advance key capital construction projects, including Dunbar Hall at North Dakota State University, if certain contingencies materialize.

As set forth in the bill, “if the office of management and budget determines that actual general fund revenues for the period” of July 1, 2015 through June 30, 2016 exceed estimates at the end of the 2015 session by ten percent, the construction projects would be funded through an appropriation. Even if revenues fail to improve beyond estimates, the bill takes advantage of low interest rates by providing for bonding authority as a way to finance these projects.

“This bill outlines construction projects that are widely recognized as priorities,” Mathern said. “If the funds are there, this bill permits the projects to go forward. If the funds are not sufficient for an appropriation, the bill allows for the possibility of bonding as a way to advance these projects.”

Mathern clarified that while the bill identifies many critical construction projects, the Legislature need not take an all or nothing approach with regard to these projects. “I’m hoping this bill will be the start of a conversation on creative ways we can finance construction priorities in a time of uncertain budgets.”

Senate Assistant Minority Leader, Joan Heckaman of New Rockford, took issue with a House proposal to create a so-called “next biennium K-12 education fund.” As set forth in HB 1337, the fund would be established by taking $712 million in revenue from this biennium and establishing a fund, ostensibly for K-12 education, that could not be touched until the 2017 biennium.

“We’re all about investing in education, but taking over $700 million dollars off the books this biennium is flawed and unnecessary,” Heckaman said. “We’ve worked hard to fund K-12 education and continue property tax relief through ongoing revenues, and there is nothing in the latest revenue projection that indicates we will be unable to continue that approach. Walling off hundreds of millions of dollars this session is like weathering the storm by drilling holes in the roof, and we will be working with our Senate colleagues to turn back that unsound approach.”

The appropriators also said they will continue to work with their colleagues in the House and Senate to put together contingent budgets agency by agency.

“When it comes to planning for contingencies, we’ve got our work cut out for us in the coming weeks,” Guggisberg concluded. “But engaging in that kind of careful planning is much better than leaving town only to watch red ink pool up or, alternatively, see important needs go unmet.”

North Dakota Democratic lawmakers were encouraged by the news from Moody’s that the state continues to be an attractive destination for workers.

“The increase in public and private investment in our state continues to attract more workers than any state in the nation. This is not the time to reverse course by discontinuing investing in our state,” Guggisberg added. “North Dakota weathered the recession with a strong energy sector that created jobs, raised wages and increased revenue to our state and we continue to buck the trend because of our investments in other sectors. We can’t stop this work due to a one-time forecast, now is the time to invest in the education and infrastructure needed to train tomorrow’s workforce in the energy sector and beyond.”


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