Committee hears bill to extend sales-tax exemption to all fire departments

The North Dakota House Finance and Taxation Committee opened a hearing on House Bill 1139, which would allow every fire department in the state to make sales-tax-exempt purchases regardless of how the department is organized.

Representative Brandy Pyle, sponsor of House Bill 1139, told the committee the measure would “level the playing field” by eliminating discrepancies between fire departments tied to cities or rural fire protection districts and those organized independently. She said the change would let departments stretch limited budgets and “reinvest more into their operations rather than spending extra funds on taxes.”

The bill drew supporting testimony from John Hale, fire chief of the Castleton Fire Department. Hale said Castleton’s department covers about 385 square miles for primary fire protection, serves roughly 4,500 residents and, when extrication calls are included, has a response zone of about 745 square miles. He told the committee Castleton is organized as a 501(c)(3) and said the exemption would remove a “cost differential” that forces some departments to build funds before purchasing equipment. Hale said Castleton’s Insurance Services Office rating is 4 and that annual operating receipts from member entities average about $300,000, though expenses can spike in years when a new apparatus is purchased.

Committee members pressed for details the bill did not provide. Representative Haggart asked how many departments statewide would be affected; sponsor Pyle and later Shannon Fleisher of the Office of the State Tax Commissioner said the department did not have that count. Fleisher, an associate director with the tax commissioner’s office, also told the committee she found no existing motor vehicle excise tax exemption for fire departments — she saw one for ambulances but not for fire apparatus — and said such an exemption could be added to the bill.

Members also discussed insurance differences. Hale said the North Dakota Emergency Response Fund (NDERF) provides coverage for city and fire protection district departments, but 501(c)(3) departments typically obtain coverage from private insurers; he named Paradigm as an insurer used by at least one nearby 501(c)(3) department.

Committee members requested additional technical work before action. Several members asked for clarification of whether the bill’s language would require or replace the current “certificate of existence” step referenced in statute for qualifying fire districts; Representative Porter and others suggested an amendment to cover motor vehicle excise tax as well as sales tax. The committee did not take a final vote on House Bill 1139 and indicated staff and sponsors would return with clarified language and additional data (including the number of affected entities and estimates of annual sales-tax impact).

No formal action was recorded on House Bill 1139 at the committee meeting. The hearing record shows general support from presenters and from written testimony submitted by departments that could not attend in person.

The committee noted potential next steps: confirm how many fire departments are organized as 501(c)(3) entities, determine typical annual sales-tax payments for those departments, decide whether to add a motor vehicle excise tax exemption, and clarify the bill’s interaction with any statutorily required certifications.