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Published June 12, 2012, 04:17 PM

ND Weighs Becoming 1st State to End Property Taxes

BISMARCK, N.D. (AP) — Voters were to decide Tuesday whether to make North Dakota the first state to eliminate local property taxes, but a businessman who helped put the constitutional amendment on the ballot conceded it could be walloped at the polls.

By: Dale Wetzel, Associated Press

BISMARCK, N.D. (AP) — Voters were to decide Tuesday whether to make North Dakota the first state to eliminate local property taxes, but a businessman who helped put the constitutional amendment on the ballot conceded it could be walloped at the polls.

Under Measure 2, property taxes would be eliminated and the Legislature would be ordered to supply replacement revenue to the local governments that depend on them. The state Tax Department estimated the needed sum would be more than $800 million annually.

No state ever has eliminated local property taxes, according to the National Conference of State Legislatures.

Mike Kramer, 57, of Bismarck, would like North Dakota to be the first.

"When I pay off my mortgage, I want to be able to have clear title to my property just the way you can have clear title on your vehicle," the contractor said while stopping to vote early Tuesday at the Bismarck Civic Center. "I'm willing to pay another sort of tax to make that up, but I don't like the idea of property taxes."

Robert Hale, a Minot attorney and businessman instrumental in pushing the measure, said he remained hopeful despite two public opinion polls that showed the amendment going down to a "crushing" defeat.

"I am not an optimist unrealistically. I just have listened to too many people say they are supporting us," Hale said. "I hope the people who have been frustrated with what's going on vote that way ... I put the time and effort into it for that reason, and so did everyone else who (backed the measure)."

The issue was one of several politically charged measures on the ballot drawing a steady flow of voters as soon as polls began to open at 7 a.m., said election inspector Darryl Dolan. He estimated the civic center was seeing about 100 people per hour.

"It's been a real good turnout. There's good flow," he said.

Cass County Auditor Mike Montplaisir said he expected up to 30,000 people in the state's most populous county to vote, topping the previous high of 26,000 for a primary election. More than 43,000 North Dakotans had voted before Tuesday using absentee ballots and early voting procedures set up in some counties, according to the secretary of state's office.

The property tax proposal gained currency in part because of North Dakota's economic prosperity, fueled by an energy boom that has left the state treasury with surpluses greater than $1 billion. The state has had the nation's lowest unemployment rate, and the measure's supporters say North Dakota government could afford to replace the roughly $812 million per year generated by local property taxes.

But Scott Neumann, a 59-year-old high school orchestra teacher in Bismarck, was skeptical of that and voted against eliminating local property taxes.

"If we abolish it, where will the money come from?" asked Neumann, who rode a recumbent bicycle several miles in bright purple tights to a polling place at the United Tribes Technical College.

Gary Reile, 70, of Bismarck, had another reason for voting against the measure: "Property tax is one of my only tax deductions that I get anymore. I want to be able to keep that," he said.

Legislators predicted if voters endorsed the amendment, Gov. Jack Dalrymple would have to quickly call a special session to deal with the aftermath.

"The more that people understand what this measure is all about, the more they seem to reject it," said Andy Peterson, president of the North Dakota Chamber of Commerce, which opposed the amendment. "We're hearing from folks who think their property taxes are too high, but they agree this is not the answer."

The amendment was put on the ballot by a citizens' group called Empower the Taxpayer, led by Hale and Charlene Nelson, a Casselton activist. More than 27,000 North Dakota voters signed petitions demanding the vote.

A decade ago, Nelson led a successful effort to repeal changes in North Dakota's bank privacy laws, approved by the 2001 Legislature, which allowed banks to sell their customers' information without obtaining written permission.

Hale has fought what he says is the city of Minot's illegal spending of taxpayers' money to subsidize private businesses, which he said often do not keep job-creation promises they make in exchange for the aid.

However, the amendment raised concerns among a diverse coalition of organizations, from North Dakota's Chamber of Commerce to the state Farmers Union and groups representing local governments, public employees and school teachers. They organized a vocal, well-financed campaign, arguing the measure would transfer budget power from local governments to the Legislature, and leave questions about which local projects lawmakers would have to pay for.

"We had all these diverse groups that came together and said, 'Listen, this is bad for North Dakota,'" Anderson said.

In February, Hale, Nelson and Empower the Taxpayer sued Tax Commissioner Cory Fong, four state legislators and other public officials, claiming they were violating North Dakota laws by using taxpayer money to spread false information about the measure's impact.

A district judge dismissed the lawsuit, and the North Dakota Supreme Court upheld the action last week. The justices ruled unanimously that private citizens could not sue to enforce the campaign laws in question; that job, they concluded, must be left to prosecutors.


Associated Press writer James MacPherson contributed to this report from Bismarck, N.D.

Copyright 2012 The Associated Press.

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