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Published February 02, 2012, 10:04 AM

Foes of ND property tax measure say idea 'radical'

BISMARCK, N.D. (AP) — Abolishing North Dakota's property taxes would end local control over projects and services and drive up state sales and income taxes to make up the lost revenue, the proposal's critics said Wednesday.

By: DALE WETZEL, Associated Press

BISMARCK, N.D. (AP) — Abolishing North Dakota's property taxes would end local control over projects and services and drive up state sales and income taxes to make up the lost revenue, the proposal's critics said Wednesday.

An assortment of organizations, some of which depend on property tax revenues, have formed a coalition to fight a proposed constitutional amendment that would ban property taxes.

North Dakotans will decide the question when they vote in June on the amendment, which will be listed as Measure 2 on the ballot.

The group, Keep It Local North Dakota, held news conferences in Bismarck, Fargo and Grand Forks on Wednesday to publicize what members said were the amendment's shortcomings.

The proposal bans property taxes — which are a key source of money for cities, counties, school and park districts, and other local governments — and orders the Legislature to craft a way to replace the money. At least $730 million annually would be needed.

If the amendment were approved, city and county commissioners, school board members and others would have the monumental job of cajoling legislators for money for local projects, said Andy Peterson, president of the North Dakota Chamber of Commerce and a spokesman for the anti-Measure 2 coalition.

"We don't think that's a good thing that when the city of Mandan or Bismarck or Grand Forks or Williston or any of these communities need to put up a stoplight, need to hire more police or (firefighters), need to build a building or a street — essentially, they would have to come to the state Legislature in Bismarck to get permission to do that," Peterson said.

Putting a property tax ban into the North Dakota Constitution would force lawmakers to contemplate raising state taxes on sales and income, Peterson said. It could negate lawmakers' efforts in recent years to lower income tax rates for corporations and individuals, he said.

"If the income and corporate income tax goes up, and goes up dramatically, to cover this shift, it will chase employers out of the state," he said. "That means jobs go away."

Supporters of the measure say high property taxes are forcing people out of homes they've paid for, because they can no longer afford the property tax bills.

They contend the coalition is made up mostly of organizations that benefit from property taxes. Its members include the North Dakota League of Cities, the Association of Counties, the state Public Employees Association and the North Dakota Education Association, whose members are public school teachers.

Robert Hale, a Minot attorney and businessman who helped to draft the measure, said it would give local governments discretion in how to spend their replacement aid.

"It does give local control. Right now, there isn't any," Hale said. "It allows the spending of the revenues to be decided by the local elected officials. Measure 2 gives them exactly what they claim they want."

Hale believes eliminating the property tax would spur business development in the state.

"More research has gone into the development of this than probably anything that has been on the North Dakota ballot, ever," he said.

Peterson said a number of business groups are opposing the measure, in part becaue they fear it will cause an upheaval in the state's tax structure.

"Businesses want predictability. They want to know what's coming," he said. "And they want to know that if taxes are going to change, there's a long-term plan, not a knee-jerk reaction."

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