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Published February 16, 2012, 12:01 AM

Lawsuit: ND Officials Lying About Property Tax Measure

BISMARCK, N.D. (AP) — Supporters of a proposal to abolish property taxes sued North Dakota's top revenue official and other leaders Wednesday, claiming they are illegally using public money and making false statements to fight the measure.

By: Dale Wetzel, Associated Press

BISMARCK, N.D. (AP) — Supporters of a proposal to abolish property taxes sued North Dakota's top revenue official and other leaders Wednesday, claiming they are illegally using public money and making false statements to fight the measure.

The lawsuit, filed Wednesday in state district court in Bismarck, claims Tax Commissioner Cory Fong and other officials are violating North Dakota laws that bar the use of public money and resources to campaign against voter initiatives.

"Elected officials, government entities and organizations funded with taxpayer dollars are actively and intentionally engaged in lies, misrepresentations, deceptions, mischaracterization and fear-mongering," said Robert Hale, a Minot businessman and attorney.

Hale is a member of Empower the Taxpayer, a group that organized a petition drive to put the constitutional amendment to a statewide vote. It will be listed as Measure 2 on the June primary election ballot.

Hale, Empower the Taxpayer and Charlene Nelson, of Casselton, who is chairwoman of the initiative campaign, filed the lawsuit. They are represented by Lynn Boughey, a Bismarck attorney who has handled previous lawsuits Hale has filed to challenge taxpayer support of private business ventures.

The lawsuit filed Wednesday lists Fong; state Sens. Dwight Cook, R-Mandan, and David Oehlke, R-Devils Lake; state Reps. Lonny Winrich, D-Grand Forks, and Chuck Damschen, R-Hampden; Cass County Commissioner Scott Wagner; Divide County Commissioner Doug Graupe; and Beth Innis, the Williams County auditor, among its defendants.

North Dakota associations that represent county and city governments, school districts and weed control boards are also listed, as is Darcie Huwe, the city of Wahpeton's finance director.

The lawsuit says the elected officials who are defendants should be barred from holding office and prohibited from making anything but factually neutral statements about the measure.

Fong called the lawsuit "the equivalent of a gag order" and said it was "really intended as a distraction from the very important issues that should be brought out in a discussion of the measure."

"I think I was elected as tax commissioner ... to have comments and analysis of important measures that affect our tax system," Fong said. "This measure obviously impacts our overall tax system."

Andy Peterson, president of the North Dakota Chamber of Commerce, which is part of a coalition opposing the proposed amendment, said the lawsuit's allegations were baseless and that no public money was being spent on an anti-Measure 2 campaign.

"The proponents ... are realizing that the measure will not stand on its own merits and they're losing in the court of public opinion," Peterson said. "They're losing this argument."

City and county governments, school and township boards and other local jurisdictions depend on property taxes to finance their operations.

The amendment would direct the Legislature to devise a plan for replacing the property tax revenues that local governments would no longer collect, and says lawmakers must provide money for their "legally imposed" obligations.

North Dakota law generally bars the use of public money or property for political activity, and says it is illegal for anyone to deliberately present false or misleading information about an initiated measure. Elected officials and public employees who run afoul of the law risk losing their jobs and, in the case of some elected officeholders, impeachment and banishment from the ballot.

The lawmakers have been criticized for claiming in public statements that it could raise state sales and income taxes, put police and fire protection in jeopardy, spawn lawsuits over the measure's meaning, and shift power from city and county governments to the state Legislature.

Several statements made by Measure 2 critics that its supporters believe are false or misleading were made at an October forum hosted by the North Dakota Association or Counties.

The lawsuit says Fong speculated that state sales or income taxes could be forced up if the measure is approved, and said local property tax collections in 2010 totaled $810 million, when Measure 2 would affect only $667 million in revenues.

The larger number included special assessments levied to finance specific projects, which the measure would not affect, the lawsuit says.

Cook, who is chairman of the North Dakota Senate's Finance and Taxation Committee, said during the October counties forum that the measure would shift power from local governments to the Legislature.

"It's going to be the opposite of local control. I figure it's basically going to eliminate local control," Cook said, adding, "I don't really cherish the idea of being a full-time legislator."

Hale said Wednesday the amendment assures local governments the Legislature would make up the money they lost, and that they could spend it as they pleased.

"Our (property tax) system is worse than it's ever been. Frankly, it's not fixable," Hale said. "It's time we put this tax out of its misery, and we put property owners out of their misery trying to deal with it."


Copyright 2012 The Associated Press.

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