Property Tax Buydown

A candidate for the North Dakota House of Representatives, Roscoe Streyle, has an intriguing proposal, one that may win many hearts and minds around North Dakota. His idea is to buy down half of Residential Property tax for any North Dakota resident. The idea itself is bold and intriguing. Most people would welcome property tax relief because it's tangible and will actually affect your pocketbook. Initially, it sounds like a great idea but is not the best way to permanently reduce property taxes.

So, his idea would essentially take from numerous different buckets that are typically money set aside for other purposes and use that money, which right now is flush with extra cash because of various commodities, including oil, and buy back 50% of property taxes. The first question would be "Can we continue this in perpetuity? Is it sustainable?" The answers to those questions could be a "Yes" but with some caveats. If we are going to rob Peter & Mary to pay Paul, then how are we going to pay Peter back? Peter will eventually want money back, even with interest, and it's our fiscal duty to compensate him. How can we do this without lowering assets for Peter or Mary?

If we can't pay them back then someone may say "well, it was a temporary fix but people need the services that the cities and towns provide so we need to continue levying property tax". The legislature would then have to either reduce the buyback or eliminate the property tax buydown entirely, because those buckets they took from earlier still need to be filled. Now, residents would see their property tax bill double once again, back to rates before the buydown was enacted. Since that would not be favorable to many legislators and residents, one conservative legislator may propose a more extreme bill such as forcing city councils to cap the property tax locally, thus making them eliminate essential services on a local level (this very thing was proposed in the recent past). Eliminating property tax altogether would just force the legislator to micromanage local government, even Mr. Streyle admitted as much in a recent radio interview. What is the solution to the problem of rising property taxes?

Property taxes are such a part of our life that we can't really see life without them. It's a talking point in conversation and a reality of local municipal governments. How can anyone alleviate the property tax burden while maintaining the quality of services that they provide? One way is to follow through on a plan for a buydown but in a more sustainable fashion. Instead of robbing Peter to pay Paul, the legislature could raise income taxes in a tiered fashion and use income tax revenue to buy down on property taxes. It is sustainable because incomes are generally stable for the majority of folks and a person can count on them to continue in that fashion. You can budget on something like that much more effectively. Income taxes are generally (at least they are supposed to be) fair and equitable and constitutional. It would not require significant bucket-sharing that Mr. Streyle's plan requires and it would not have to be re-worked in subsequent budget sessions. Instead, they would be simply adjusted for slight growths or declines instead of a more significant re-working or elimination as this current proposal requires.

In all fairness, I like the idea of property tax buydowns. Property taxes are regressive and are contingent on value of property which can be an unfair assessment. Income taxes are much more sustainable, equitable, and constitutional. Residents of any community should not see a reduction in public services, such as schools, roads, snow-clearing, etc., for the sake of campaign pledges. Instead, we should continue seeing high quality services but for a fair price that a sustainable buydown could provide.