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Bid to abolish property tax debated

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BISMARCK, N.D. -- A proposed constitutional amendment that would make North Dakota the only state in the nation to abolish property taxes would be "the most profound policy change since statehood," a county commissioner said Monday.

The measure, which goes to a statewide vote in June, is stirring controversy in North Dakota, where oil and gas development have contributed to an expanding economy and low unemployment that has largely insulated the state from the nation's economic malaise.

That prosperity has spurred arguments that North Dakota can afford to abolish local property taxes, and that its economy would become more attractive to business expansion if it did so. Critics said the change would force the Legislature to drum up $740 million elsewhere for North Dakota's school districts, counties and cities.

Scott Wagner, a Cass County commissioner, said the amendment would result in a Capitol donnybrook over budget priorities, with local elected officials having no vote on how the fights were resolved.

"This is potentially the most profound policy change since statehood," Wagner said.

A citizens' group critical of rising government outlays got the proposed amendment on the ballot. State general fund spending has doubled from $2 billion to $4 billion since 2005.

If the amendment were to be approved, the Legislature would have to draft a plan to provide replacement money for local governments. North Dakota's school districts, counties and cities rely on those property taxes to finance their services.

No state has abolished property taxes, although a number have attempted to limit their growth, according to the National Conference of State Legislatures in Denver and the National Association of Counties in Washington.

Jacqueline Byers, research director for the National Association of Counties, said a few local governments have not collected property taxes during good economic years, but have not taken the step of eliminating them.

"They need (property taxes) in their arsenal," Byers said.

Supporters of the property tax ban said it is needed to prevent older homeowners on fixed incomes from being priced out of their homes by rising tax bills.

Vernon Brossart of Williston, in northwestern North Dakota's booming oil-producing area, said rising property values allow local governments to rake in more revenue without raising tax rates.

Property owners who have sold their homes and moved into apartments to avoid property tax bills now are faced with skyrocketing rents, the consequence of strong housing demand from oil workers, Brossart said in an interview Monday.

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