BISMARCK, N.D. — North Dakota voters' emphatic rejection of a citizen initiative to abolish property taxes hasn't cooled state lawmakers' ardor for ways to reduce the unpopular levies.
The Legislature's interim Taxation Committee on Tuesday expressed its support for continuing a state program that currently provides schools with $342 million over two years in return for lowering their property tax rates.
The sum results in reductions of more than 15 percent to a homeowner's annual property tax bill.
Increases in property values statewide are likely to boost the cost to more than $400 million during the state's next two-year budget period, which begins July 1, estimates say.
The committee also backed a proposal that would give property owners an annual exemption for the first $75,000 of their home's value. Homeowners age 65 and older would get a $125,000 exemption.
The idea, which would reduce property tax payments by $384 million over two years, offers more generous tax breaks to homeowners than the existing school subsidies. In Bismarck alone, the property tax bill for a $150,000 home would be cut in half.
However, the benefits do not extend to commercial and agricultural property owners, both of whom benefit from the existing subsidy program.
Sen. Dwight Cook, R-Mandan, said he believed the present subsidy program has worked well since the Legislature initially approved it three years ago.
"It's got some wrinkles in it, but for the most part, of all the things we've done, this has worked the best," said Cook, who is chairman of the North Dakota Senate's Finance and Taxation Committee. "I haven't seen anything that I think would be smoother, or work better."
Both measures will be introduced in the 2013 Legislature, which begins in January.
Unhappiness with high property taxes motivated a citizen initiative to abolish them and require the Legislature to provide replacement money to local governments. The initiative was defeated last June, with more than 76 percent of the voters rejecting the idea.
Advocates of the measure argued that state and local governments granted frequent property tax exemptions, which forced other taxpayers to pick up the slack. However, the Taxation Committee on Tuesday turned down a bill, pushed by Rep. Roscoe Streyle, R-Minot, to eliminate most of the exemptions.
The proposal would have abolished "renaissance zones," which provide property and income tax breaks to encourage redevelopment of city downtowns, and property tax exemptions for new homes.
"There's no need to stimulate housing construction," Streyle said. "It's simply shifting the tax burden. I think it's a terrible tool."
The city of Minot keeps expanding its renaissance zone, which puts existing businesses at a disadvantage, Streyle said. The tax break punishes "the business that's been around there for a long time," he said. "I think that's inherently unfair."
Reps. Shirley Meyer, D-Dickinson, and Jim Kasper, R-Fargo, said renaissance zones have helped spur rehabilitation of aging buildings and transformed Fargo's downtown.
"We're looking at just taking 100 percent of local control away from individual communities," Meyer said. "We're telling them ... we know better than you do, and I believe a local community, they can decide."