North Dakota lawmakers debate property tax relief bill with cap on levy increases

North Dakota Gov. Kelly Armstrong's vision for property tax reform and relief took shape Tuesday, with most of the testimony on the bill being positive while some concerns were raised over caps on levy increases.

House Bill 1176 spearheaded by Rep. Mike Nathe, R-Bismarck, includes all the changes Armstrong outlined in his State of the State address, as well as increased tax relief for renters and elderly homeowners.

Nathe, the main sponsor, said the bill was a collaborative effort with five or six lawmakers pitching in.

HB1176 includes Armstrong’s proposed increase to the Primary Residence Tax Credit from $500 to $1,550 for the current biennium, with the potential for that dollar amount to grow in subsequent sessions. Nathe stressed that this was a two-year bill and that lawmakers would have the opportunity to determine if the legislation is continued or expanded during the 2027 legislative session.

House Majority Leader Mike Lefor, R-Dickinson, who spoke in support of the bill, said that roughly 92% of households eligible for the $500 Primary Residence Tax Credit passed in 2023 applied for it.

Nathe said the state already allocates $1.3 billion in property tax relief, yet people do not know they are receiving support. Despite the $1.3 billion, Armstrong said during his testimony that when he was campaigning last spring, property tax relief was still the No. 1 issue brought up by voters.

The bill also proposes expansions to both the Homestead Property Tax Credit and the Renter’s Refund program, which both seek to ease the tax burden on aging and disabled homeowners and renters.

Armstrong said he knew parts of the bill would need to be worked on in coming sessions to address any problems that arise but felt that when the Legislature got the bill where they wanted it, it should be made permanent. He said previous attempts at relief and reform had not worked and had created general fund expenses that were passed down to future legislators to handle.

“So I think the reform is really important,” Armstrong said. “And I know there's going to be people that have concerns with it, but I think the alternative is either do the same thing we do over and over and expect a different result, or do nothing. And I don't think the North Dakota citizens will stand for either one of those.”

The total cost of the bill came out to be $535 million, slightly higher than the $483 million suggested by Armstrong in his State of the State Address.

The last major piece of the bill – and the one that received the most pushback – was the proposed 3% cap on property tax levy increases year-on-year for political subdivisions. If political subdivisions want to raise their levy by more than 3%, Nathe said they would need to put it to voters during a general or special election to allow them to decide.

Rep. Zachary Ista, D-Grand Forks, asked Nathe if there was an enforcement mechanism in place in case districts tried to raise levies by more than 3% despite the law.

Nathe said there was not, but he felt it was unlikely that districts would willingly go against the law and even if they did, the attorney general would likely take legal action against them.

Minot Alderman Mike Blessum gave testimony in opposition to the bill. He said the 3% cap on levy increases was the state exerting too much control over local decision-making.

“Looking back at last session, I stood before you on a bill that Rep. (Jeff) Hoverson brought asking you to put limits on yourselves for what you spent,” Blessum said. “There was very little appetite for that. Now it's ironic for both of us, because now I'm on the other side of it saying, ‘Don't impose those limits on us.’”

Representatives of both the North Dakota Association of Counties and North Dakota League of Cities testified neutrally on the bill, but expressed concern over the 3% caps, saying they could result in a loss of services for the community.

“It might come as a surprise that there are certain counties that actually have a zero general fund levy. What's 3% of zero? How would we implement that?” Aaron Birst, executive director of the North Dakota Association of Counties, said at the hearing. “We're willing to work with you. We have subject matter experts; if you want to hear from them, they will be available, and I certainly will be available too, but we are open to budgetary limitations.”