Tax commissioner outlines digital push, GenTax costs and primary-residence credit outreach in budget hearing

Brian Kroches, North Dakota tax commissioner, told the House Appropriations Committee, Government Operations Division that his office has focused on digital transformation—moving sales-account holders to electronic filing, administering the primary-residence credit and reducing manual work—and that those efforts carry ongoing IT and operating costs the department seeks to fund in the coming biennium.

Kroches said the office currently runs roughly 117 FTEs and reported vacancies had fallen from higher historical levels; he told the committee that as of December 1 the office had six vacant positions. He said turnover has declined but that recruiting for specialized roles remains difficult, singling out corporate income tax auditors as “incredibly difficult to fill” because the private sector can often pay more.

GenTax and IT support: Kroches described GenTax and other IT costs as large line items. He said GenTax support for the current biennium is about $4.4 million and that the upcoming biennium would show an increase to about $4.85 million—roughly a $450,000 increase—mainly for infrastructure and NDIT fees. The commissioner told the committee the department asked the committee to restore prior executive‑budget reductions and to fund certain IT increases.

Primary-residence credit administration and outreach: Kroches described the department’s work administering the primary-residence credit (the program established under House Bill 1158), noting the office received more than 24,000 calls during last year’s rollout and that, during the current filing cycle, the department had already received approximately 65,000 applications as of mid‑January. Kroches said the agency spent about $427,000 on marketing during the first outreach effort and approximately $78,000 on programming; he said the prior appropriation of $1.5 million for the program was largely adequate and that about $1.0–$1.1 million was used from that appropriation.

Audit and process notes: Kroches told the panel that the agency’s most recent financial audit was clean with one recommendation: to enhance monitoring and verification procedures related to the homestead property tax credit and the disabled‑veterans tax credit, which counties administer. He said the office is exploring collaborative approaches with counties to address that recommendation.

Funding requests and fiscal notes: Kroches walked the committee through the office’s funding requests and compared the department’s ask to the executive recommendations from the previous governors’ budgets. He noted the department had not included programming costs for a proposed broad tax portal in its baseline request because the portal funding was expected to be provided via a separate bill; committee staff confirmed Senate Bill 2166 (a proposed tax portal) contains a fiscal note request for portal funding.

Questions from lawmakers: Committee members asked about paper filings (Kroches said the office will keep paper filing available while encouraging electronic filing), fees on electronic payments, costs for ACH/direct-deposit processing and whether applicants in trusts would be eligible for the primary-residence credit (Kroches said legislation under consideration would address trust eligibility and the agency is preserving applications for trust-held homes). Representative Meyer and others asked for details on the fiscal-note numbers and whether the governor’s executive budget restored prior reductions; Kroches pointed to specific line items for NDIT fees and GenTax support that the executive recommendations had included.

Next steps: The committee indicated it would have additional follow-up and asked the commissioner to provide detailed equity and compensation comparisons and other supporting materials to legislative staff. No formal vote was taken during the hearing.