Senate Finance and Tax Committee advances amended ag mill buy-down, hears broad debate on budget caps tied to CPI

Senate Committee on Finance and Tax Chairman Mark Weber, R., opened a public hearing on Senate Bill 2,378 on property tax reform and later presided over action on an amended Senate Bill 2,363 that would buy down school mill levies for agricultural property.

The hearing on SB 2,378 focused on a proposal from Senator Mark Weber to limit year‑to‑year increases in political subdivisions’ budgets using the consumer price index (CPI) and to allow citizens to vote to exceed that cap; the bill would require a two‑thirds voter approval held on a general or primary election day to exceed the cap.

Nut graf: The committee’s session combined policy debate and technical testimony on how to constrain property tax growth while preserving local governments’ ability to deliver services. Witnesses included municipal, county and school representatives who raised competing concerns about reserve levels, voter thresholds, effects on fees and the special funding structure for schools. The committee later adopted an amendment to a different bill to place agricultural land in the tax‑relief discussion and voted to move that amended measure to appropriations.

Details of the proposal and testimony

Senator Mark Weber, the bill’s prime sponsor, framed SB 2,378 as a response to sustained property tax growth and described the measure as a budget cap tied to the CPI rather than a fixed percentage on property tax rates. “Property tax is going to be the signature bill of this legislative session,” Weber said, adding the bill would let citizens vote to exceed the budget cap on a statewide general or primary election and that “the consumer price index allows, you know, in inflationary times, some may argue about that, but, I felt that might be a better way to go.”

Senator David Hogue, who testified in support, recommended applying constraints to political subdivisions that hold unusually large reserves. Hogue suggested targeting districts with reserve balances above a threshold (he discussed 7 percent as an example) and warned that capping property tax without attention to other local revenue sources could push municipalities to raise user fees instead, shifting the burden to residents.

Municipal officials and local government advocates acknowledged the need for reform but urged caution. Matt Gardner, executive director of the North Dakota League of Cities, said communities vary widely in size and revenue mix and described CPI as a plausible index because it fluctuates with inflation: “When it’s based on inflation, I think that is a little more reasonable,” Gardner said. Gardner also noted that cities are custodians of infrastructure and that costs such as fire trucks and pavement have risen substantially.

County officials flagged operational concerns. Linda Swyjovic of the North Dakota Association of Counties said the association was not outright opposed but had “severely concerning” issues with the bill as drafted, including the one‑year voter approval provision and a proposed two‑thirds approval threshold. She pointed out that under current law many political subdivisions may retain substantial balances (she said political subdivisions are allowed to retain large percentages of levy funds as reserves) and warned a budget cap could curtail local governments’ ability to respond to infrastructure and service needs, particularly in counties that experienced rapid growth tied to energy revenues.

School representatives urged the committee to treat school districts differently from other political subdivisions. Brent (president, North Dakota Small Organized Schools) and Amy DeCook, executive director of the North Dakota School Boards Association, both said schools’ revenue flows and timing make them vulnerable to a blunt budget cap. Brent presented a worksheet from one district showing a $233,000 swing between preliminary and later state funding estimates driven by changes in pupil counts; he emphasized that school funding depends on the state’s formula and on a statutory deduction of 60 mills (6 percent) in the funding formula that could interact poorly with a budget cap. DeCook reiterated that current voter approval provisions and multi‑year levy authorities for schools differ from the two‑thirds threshold proposed in the bill and asked the committee to account for those differences.

Amendment and committee action on agricultural buy‑down (SB 2,363)

Later in the session the committee considered an amendment to Senate Bill 2,363 presented by Senator Robert Gerberly, senator from District 28. Gerberly said the amendment would change the bill to buy down school mill levies for agricultural property by reducing the school levy for agricultural property from 60 mills to 30 mills and that the change would target tax relief to a wider base of citizens, especially in rural counties where agricultural property comprises a large share of taxable valuation. He told the committee the amendment as drafted carried an estimated price tag of about $84,000,000.

Committee votes and procedural outcomes

The committee voted on a motion, moved by Senator Patton and seconded by Senator Wallen, to give a “do pass” recommendation to the amended amendment. The clerk recorded the roll as: Weber — Aye; Vice Chair Rummel — Nay; Marsali — Yes; Patton — Yes; Powers — Yes; Wong — Yes. The motion to adopt the amendment passed 5–1.

The committee then voted to advance the amended bill. Senator Powers moved and Senator Wallen seconded a motion to approve the amended SB 2,363; the clerk recorded a 5–1 vote in favor (Weber: Yes; Rummel: No; Marsali: Yes; Patton: Yes; Powers: Yes; Wallen: Yes). The committee recorded that the amended bill would be referred to appropriations and named a committee member to carry it forward.

The committee also took formal do‑not‑pass action on three other property‑tax related bills that the members said were superseded by the bill the committee advanced. The roll calls on the do‑not‑pass motions were unanimous or near‑unanimous; officers were assigned to carry the do‑not‑pass dispositions to the next stage.

Why it matters

Committee members and witnesses framed the debate as a tradeoff between delivering property tax relief and preserving local governments’ capacity to maintain infrastructure and services. Witnesses repeatedly warned that a budget cap that did not account for distinct revenue structures, reserve practices or statutory school funding mechanics could have unintended impacts: pushing up user fees, constraining multi‑year capital projects, and creating inequities across school districts with different valuation growth patterns.

What comes next

The committee advanced the amended agricultural mill buy‑down to appropriations and assigned a carrier. Lawmakers signaled additional hearings were scheduled later in the day on related bills and that fiscal and legal details — including how voter thresholds, effective dates and reserve rules would be reconciled with existing North Dakota Century Code provisions — remain to be resolved in later committee work and conference negotiations.

Votes at a glance

- SB 2,363 (amended, agricultural mill buy‑down): Amended and advanced to appropriations, committee vote 5–1 (mover: Sen. Powers; second: Sen. Wallen). Estimated price tag discussed by sponsor: ~$84,000,000.

- SB 2,279 (Shively; mill drop 60→45 across property classes): Committee voted do not pass (mover: Sen. [unnamed]; second: Sen. Patton). Do not pass carried by committee; carrier assigned.

- SB 2,298 (Mathern; larger property‑tax relief proposal): Committee voted do not pass (mover: Sen. Powers; second: Sen. Wallen). Do not pass carried by committee; carrier assigned.

- SB 2,301 (Wabamah; exemptions tied to federal poverty guidelines): Committee voted do not pass (mover: Sen. [unnamed]; second: Sen. Patton). Do not pass carried by committee; carrier assigned.

Quotes (selected)

“Property tax is going to be the signature bill of this legislative session,” Senator Mark Weber said as he introduced SB 2,378.

“When it’s based on inflation, I think that is a little more reasonable,” Matt Gardner, executive director of the North Dakota League of Cities, said of using CPI to limit budget growth.

“Opposition is maybe a strong word,” Linda Swyjovic, North Dakota Association of Counties, said, but she warned the draft bill contained “severely concerning” provisions for counties and cities.

“We’re the only subdivision where there’s an expectation of local property tax to support their local school districts,” Brent, president of North Dakota Small Organized Schools, told the committee in opposition, urging schools be treated differently.

Ending note

Committee members emphasized this is an early stage of a complex policy negotiation. Lawmakers and local officials indicated work remains on formulas, reserve rules, voter thresholds and fiscal impacts before any final legislation is sent to the floor or reconciled across chambers.