Lawmakers to Consider Property Tax Discount Change in Special Session

By Donnell Preskey, NDACo Government/Public Relations Specialist

One of the issues North Dakota legislators will decide during the September Special Session is to review their actions related to the property tax discount for property taxpayers. Lawmakers voted during the January Special Session to change how the discount is applied to property taxes, moving it to be applied before the Primary Residence Credit (PRC).

Since the passage of this law many unintended consequences and technical issues have been identified primarily on the software end. Because the counties don't receive the PRC funds from the state until May, which is after the early payment deadline, programmers would have to indicate a "ghost" payment for the discount to be applied. This would create numerous issues for accounting and audits. It also created uncertainty over the PRC dollar amount to certify to the state in January when it is still unknown if that taxpayer will pay their taxes early to receive the discount.

"These are technical issues that were unknown until the companies that work on behalf of the counties started working on the programming of tax statements that will be mailed out later this year. They have hit many barriers and walls trying to implement this change," said Linda Svihovec with NDACo.

NDACo provided the Interim Legislative Tax Relief and Reform Tax Statement Subcommittee with a list of issues related to the discount change at a recent August meeting. "We have identified three primary issues with the bill passed in January," Donnell Preskey with NDACo told committee members. "The way to address all the issues is to revert back to the law as it was prior to the January Special Session."

Due to the urgency to find resolve on the issue, Senator Dean Rummel proposed a fix be addressed in the September Special Session, which was approved by Legislative Management to move forward.

The bill proposed removes the language added by lawmakers in the January Special Session, going back to the way the law has been in the past. This would allow for the discount to be applied after the PRC and solves all the issues NDACo has identified with the January law change.

"The math just doesn't work," Senator Rummel told members of the Legislative Management Committee. "This is a complex issue, I know, but we have to deal with this now because property tax statements need to be printed in December. It is critical we revert back to the law as it was in order for counties to generate accurate tax statements. This is currently a disaster."

The Legislature meets for a three-day Special Session September 2-4 where they will take up five bills. Besides the bill addressing the order of where the discount is applied, the other bills relate to funding to continue construction of the Military Gallery project, two bills focused on Kratom, and a ban on nondisclosure agreements for data centers and industrial projects.