Cap Proposal Would Limit Annual Increase in Taxable Valuations to 3%; Assessors and Counties Warn of Inequities and Budget Impacts

Representative Jason Doctor (District 7) said House Bill 1534 is intended to address both immediate property‑tax relief and longer‑term reform by limiting the taxable valuation of any parcel to a maximum annual increase of 3 percent. The bill also would permit local governments to seek voter approval, at a primary or general election, for additional mills for specific purposes for up to six years.

Doctor said the cap aims to protect taxpayers from sudden valuation jumps and to give political subdivisions predictable revenue forecasts. “What it is, the taxable valuation of any parcel cannot go more than 3%,” he said, and the bill allows voters to approve mill levies with the ballot specifying the number of mills, intended purpose and a six‑year term.

Supporters framed the cap as a way to help rural jurisdictions plan budgets and allow homeowners to “move up the ladder” without facing sharp tax increases on new homes. Representative Robin Wise said the bill would allow political subdivisions that rely heavily on property taxes to plan and, when necessary, take a proposed increase to voters for a six‑year authorization.

Opponents and administrative witnesses raised multiple concerns. Tyler Perlenberg, director of tax equalization for Stutsman County, explained that the state’s current assessment process does not always align a property’s value with market value in any given year; reassessments of areas or whole counties can correct properties that were previously undervalued. He said the 3 percent cap would lock in existing inequities and make it difficult to equalize neighboring properties: “This bill would lock in those inequities, permanently moving forward.”

Perlenberg and other county witnesses warned the cap would add administrative complexity because assessors would produce “true and full” values that would then require a second calculation to determine the capped taxable value, potentially creating new taxpayer confusion and software/workload needs. He also urged a clearer statutory definition of “improvements,” which the bill does not provide.

Walsh County Commissioner and longtime city assessor Paul Hodak said a 3 percent cap would be “devastating” for his county’s general fund. He described Walsh County’s finances — a general fund of about $6 million, with roughly $4 million in property‑tax revenue — and said the county’s heavy reliance on agricultural land (about 58% of county value) would limit near‑term value growth. Hodak presented a scenario in which modest nominal changes across classes would leave the county short of revenue needed to fund cost‑of‑living increases and health‑insurance rises for staff.

Dickey County tax‑equalization director and Ellendale mayor Don Flaherty said the bill would sever the statutory link between true and full value and taxable value and would allow jurisdictions to increase taxable valuations independent of market changes, creating further inequities. He also raised specific examples such as newly constructed commercial facilities: land still taxed as agricultural until new construction is completed, producing mismatches under the bill’s language.

Assessors and county officials suggested legislative alternatives: more frequent reassessments, clearer definitions of improvement and exemptions for property coming off tax exemptions. Witnesses noted that assessor certification reforms and staffing variability across counties affect how often jurisdictions can reassess.

Committee members asked detailed questions about transfer and improvement rules. Senator Wallin asked whether the cap would reset when a property is sold; assessors said allowing a reset at sale would reduce some inequities but would create another class of unequal tax treatment between sold and unsold neighboring properties.

Representative Doctor and supporters said the bill could be combined with other proposals and amendments; no vote occurred at the hearing.

Ending: The committee heard extensive testimony for and against the cap; members said they would take the bill under advisement and reconcile the measure with other property‑tax proposals during the session.