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North Dakota cultural values clash in tax issue

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The proposal to abolish all property taxes resulted in an interesting clash of North Dakota cultural values over the past few months, causing our frontier individualism to suffer a severe case of schizophrenia.

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Having developed a strain of rugged individualism in the settlement days, North Dakota civic values include small government, meaning minimal taxes, and local decision-making, meaning preference for local government over state government.

The proposal to abolish the property tax brought these two values into conflict. The folks supporting the repeal were playing out the minimal government argument while those opposing it were stressing the case for local control.

There is little question that the hope of the repeal supporters was to reduce the money in the public sector and  transfer it to the private sector through a major tax cut some day in the future.

In the grips of our rugged individualism theology, North Dakotans just love low taxes so why did the local control argument carry the day.

In the first place, there were some major administrative problems with the repeal proposal that had been overlooked by its supporters. There is little doubt that as the debate progressed supporters of the proposal started hearing about complications they had not even dreamed about.

Because the proposal was wrought with complications, the sponsors would have been wiser to offer an ordinary statute by petition than propose a constitutional amendment.  A statute would have enabled the legislature to make revisions and corrections; a defective constitutional provision could not be repaired without a new amendment.

Inconsistent arguments created another problem. While some saw the proposal as an actual tax cut that would "put money in the people's pockets," other supporters argued that this was not a tax cut but merely a shift of taxes to the state level.

But North Dakotans love for local control is as strong as its affection for low taxes.  This is fairly obvious when we look at the large number of local governments that we have created - more per capita than any other state in the Union.

            We not only started statehood with many township, county and city governments but we added many new local governments with special functions through the decades, attesting to our unrelenting love affair with local control.

To outsiders, our commitment to small governments is a mystery. We have scores of township governments with 15 to 20 residents; 29 counties with under 5,000, and 135 cities with populations under 100. But no matter how small they get, we just love them.

Consequently, when proposals are offered to reduce the number of local governments, the residents of even the smallest entities rise up in unison to oppose such ideas. Because these proposals always produce a firestorm of opposition, the legislature is less than enthusiastic about spending time on the issue of government consolidation.

The issue of property tax reduction is not off the table. First, however, we need to acknowledge that the legislature has been reducing the property tax burden. While the average residential and commercial property tax was around two percent of market value six years ago, it has been reduced to 1.8 per cent of market value.

And the legislature is not done. An interim committee is already looking at ways to reduce the burden even more. This tells us that just because the minimal government folks lost the debate does not mean that North Dakota has given up its romance with low taxes.

The basic logic was this: we can lower property taxes any time but if we crippled local government it would be a permanent disability.  

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