Senate hearing examines bill to cut school local contribution from 60 to 45 mills, fiscal note at $181 million

Senator Don Schaible, appearing before the Senate Finance and Taxation Committee, introduced Senate Bill 2,279 on behalf of an effort to provide broader property tax relief by reducing the statutory local school contribution from 60 mills to 45 mills.

Schaible said the measure “is an attempt to provide some property tax relief to all taxing entities” and that it is “not meant to be the complete package,” but would reduce the required local contribution within the K–12 funding formula by 15 mills. He told the committee the bill’s fiscal note estimates the state would absorb about $181,000,000 in additional school funding for the upcoming biennium if the change were enacted.

The bill would alter language in multiple sections of the state funding statutes, remove a three‑year “look‑back” levy authority that allows districts to base levies on prior higher amounts, and repeal several expired or cleanup provisions, according to Schaible’s description of the draft. Schaible summarized the practical effect: under the current formula the number of pupils times the per‑pupil payment (which he said is “really close to $12,000 right now”) yields the total funding need; the law then subtracts a 60‑mill local contribution. “This bill would move that local contribution from 60 to 45,” he said, calling the reduction “basically 1/8” of a typical property tax bill given that, he said, schools account for roughly half of most property tax bills excluding voter‑approved bond levies.

Supporters who testified included rural and agricultural organizations and school leadership groups. Brandt (president, North Dakota Small Organized Schools) told the committee that reducing the mill levy is a familiar vehicle for providing property tax relief and explained mills in percentage terms: “what this bill does, it goes from 6% of the taxable valuation to 4.5%.” He and other education representatives said they favor a broad approach that includes agricultural property rather than only expanding primary‑residence or homestead credits.

Representatives of the North Dakota Farm Bureau, North Dakota Farmers Union, the North Dakota Council of Educational Leaders, the North Dakota School Boards Association and the North Dakota Stockmen’s Association testified in favor, saying the bill would include agricultural land in relief and avoid caps that can erode local levies over time. Matt Perdue of the Farmers Union said the organization supports a mix of targeted (homestead) and broad‑based relief and called SB 2279 “a piece of the puzzle.”

Officials from the Department of Public Instruction (DPI) and the North Dakota Association of Counties provided technical background. Adam Tesher, school finance officer at DPI, explained how mill levy caps and the “base‑year” calculation work and said DPI will publish mill‑levy data to show which districts are below or at 60 mills; he said that data will be available by the end of February. Linda Swyjovic of the Association of Counties described the maximum general fund levy worksheet and confirmed that the worksheet compares a district’s current taxable valuation at the statutory rate with the highest of the previous three years (adjusted for increases and abatements) and voter‑approved levies to determine allowable levy authority.

Committee members asked whether the reduction would be the best vehicle, whether it preserves local control, and how it interacts with other proposals such as a higher primary‑residence credit or per‑pupil payment changes. Schaible said the measure would not eliminate local contribution entirely because he believes districts should retain “some skin in the game” and because districts can increase levies by voter approval.

The hearing included technical questions about caps and transition minimums that can keep some districts from returning to prior levy levels even if desired. Several witnesses warned that rigid caps can create inequities across districts when taxable valuations grow at different rates; Brandt and other school advocates urged caution about unintended consequences if a cap is applied without accounting for new growth.

No committee action or vote was taken; the hearing was closed with the committee collecting testimony and requesting additional data to compare proposals. Chairman Weber and members said they expect to take up multiple related bills in future hearings to evaluate the overall property tax relief package.