Lawmakers Hear Broad Support, Concerns for House Bill 1168 Property‑tax Buydown and Levy Caps

Representative Scott Lauser, R‑Minot, told the Senate Finance and Taxation Committee on the afternoon of the committee’s hearing that House Bill 1168 would buy down state‑mandated education mills and add statutory caps on non‑school local levies, and he asked the committee to consider amendments that would increase the buydown and adjust the cap formula.

Lauser said the bill in its current engrossed form would buy down 10 mills statewide but that he was seeking an amendment to increase the buydown to 30 mills; he also described an amendment to cap the annual property‑tax‑derived portion of budgets for political subdivisions at 6 percent or by a consumer‑price index formula and to allow local voter approval to exceed the cap. "This is still the top issue that our voters are talking about—property tax relief and reform," Lauser told the committee.

Why it matters: the proposal would change how much property owners pay and how local governments can raise revenue. A mill buydown permanently removes mill levy authority at the local level and replaces the revenue stream with state funding; caps on non‑school levies would limit annual increases of taxes paid to cities, counties, special districts and others. Several witnesses cautioned that caps and buydowns must be balanced so school funding, county services and small jurisdictions are not harmed.

What was proposed and discussed

Lauser summarized the bill’s evolution since 2023 and said earlier drafts proposed a full 60‑mill buyout of K‑12 education mills; the fiscal estimate for that earlier 60‑mill proposal was described in committee testimony as roughly three‑quarters of a billion dollars (transcript references to the fiscal note ranged near $757 million to under $800 million), while a competing ballot initiative ("Measure 4") was estimated at slightly over $3 billion. Lauser said the current bill is a 10‑mill buydown but asked the Senate committee to amend it to 30 mills and said he would later pursue the remaining mills in a subsequent session if needed.

Witnesses generally supported the concept of relief but diverged on particulars. Dr. Amy Copas, executive director of the North Dakota Council of Educational Leaders, said the buydown approach is "something we're very familiar with. We know exactly how it works and we know it does work," and she warned that improperly capping school levies could trigger large state backfills because of the state’s school funding formula and previous transition minimums. Brent Bogart, who provided indexing analysis, urged the committee to consider broader cost indexes (for example a municipal‑cost index) rather than CPI‑U alone when setting cap formulas. Matt Gardner with the League of Cities recommended a CPI plus an added percentage (he noted the League favors CPI+2 with a maximum) to allow municipalities flexibility to cover uncontrollable costs such as insurance and health‑care premiums.

County and municipal perspectives

Cass County administrator Robert Wilson said Cass County supports relief but asked for cap language that would reflect county growth and necessary capital projects; he provided a county resolution and described the county’s general fund balance and capital needs. Horace city administrator Vern Holper warned that rapidly growing cities face particular risk if caps limit budget growth when demand for services rises, and he urged careful treatment of growing jurisdictions.

Agriculture and business groups

Representatives of North Dakota Farmers Union, Corn Growers, Soybean Growers and the Stockmen’s Association testified in favor of HB 1168 because it would provide relief across property classes, including agricultural property. The Greater North Dakota Chamber urged inclusion of all property types to avoid shifting taxes disproportionately onto businesses.

Technical issues and unanswered questions

Committee members pressed for technical clarifications: Lauser said mill values in the bill are based on current statewide calculations (he said, as an example, that one mill is roughly worth $12 million and that a 10‑mill buydown would be about $120 million); he acknowledged varying fiscal‑note estimates for earlier versions. Committee members also asked how the bill treats base years, new growth and abatements; Lauser said the cap calculation looks back to the prior year’s property‑tax‑derived budget and that new construction and abatements are excluded from the base for cap calculation until the following year.

Education groups repeatedly warned that while schools are excluded from the proposed caps, buydowns remove mill authority and therefore permanently change local fiscal flexibility. Dr. Paul Stremek and Dr. Copas described the history of transition minimums that required state backfills when local levies could not be collected, and they said the current formula must be preserved so relief does not produce uneven outcomes between districts.

No final action

The hearing concluded without a formal committee vote. Lauser asked the committee for a "do‑pass" recommendation with the 30‑mill amendment; committee members asked follow‑up questions and heard testimony from municipal, county, education, agriculture and business representatives. No amendment votes or final committee actions were recorded during the hearing.

What to watch next

Committee members indicated interest in technical work on indexing options (CPI variants, municipal‑cost index or a hybrid) and on population or budget thresholds for exempting very small political subdivisions from caps. The bill will remain under Senate Finance and Taxation consideration as sponsors and stakeholders refine amendment language.

Ending

Representatives and stakeholders told the committee they view HB 1168 as one of several approaches to address a statewide concern: reducing property‑tax burdens while preserving school funding and essential local services. Committee deliberations and potential amendments will be key to resolving the tradeoffs discussed at the hearing.