House Finance and Taxation members on the floor in Bismarck opened a hearing on House Bill 1168, a proposal from Rep. Scott Lausser to shift the state’s 60‑mill K‑12 levy off residential property and fold that funding into the state per‑pupil formula.

The bill would eliminate the mandated 60 mills for residential property, leave those mills in place for nonresidential classes such as commercial and agricultural land, and place a 3% cap on year‑to‑year property‑tax revenue increases for non‑school political subdivisions unless voters approve an override. Sponsor Rep. Scott Lausser said the measure is intended to reduce property‑tax burdens on homeowners and fold school funding into a single per‑pupil payment handled by the state.

Why it matters: The proposal would change how K‑12 education is funded and shift recurring local tax revenue into the state budget. Lausser and several witnesses said the change could deliver substantial, immediate relief to many homeowners but would also create tradeoffs for local governments and nonresidential property owners.

Lausser, the sponsor and a Minot school‑board member, described the bill as the sixth iteration of a concept he began developing after the 2023 session. He told the committee the bill limits the local portion of residential property tax linked to K‑12 to state funding and sets the baseline per‑pupil payment in statute. “I was actually accused by a lot of people of trying to block Measure 4,” Rep. Scott Lausser said, describing the bill’s evolution; “I never advocated against Measure 4. Just said here’s the solution if that fails.”

Key provisions and figures discussed

- Buyout scope: As drafted, the bill removes the 60 mill requirement for residential property only; legislators would continue to collect and display the school mill lines on tax statements but the state would fund the equivalent amount through the school funding formula. Lausser said the narrower scope lowers the initial price tag relative to buying out all property classes.

- Cost estimates: Lausser said an all‑property 60‑mill buyout had been estimated at about $757,000,000. He said the current bill’s estimate is about $300,000,000 across the first two years (roughly $145,000,000 in year one and $155,000,000 in year two), and that the amount would be rolled into per‑pupil funding going forward.

- Levy caps and voter overrides: The bill stores a 3% cap on the portion of budgets funded by property tax for non‑school political subdivisions, with a carryforward mechanism for unused cap space. Lausser said earlier drafts used a one‑year carryforward but the current text gives a five‑year carryforward for voter‑approved levy increases; the bill requires supermajorities for some ballot overrides depending on local rules.

- Treatment of schools: The bill specifies allowable mill levies for school districts (general fund plus separate tuition and miscellaneous mill categories) rather than applying the 3% percent cap used for other political subdivisions. Witnesses from education associations told the committee that schools are treated differently because they lack the broad revenue sources available to municipalities.

Committee discussion and concerns

Committee members pressed on fiscal sustainability, equity across property classes, and unintended consequences. Representative Dressler asked whether bond votes would be easier for districts if many homeowners saw a reduced liability on their property‑tax statements; Lausser acknowledged bonds could be more likely to pass because household tax liabilities would fall but said the state would be assuming the 60‑mill obligation.

Several members raised equity concerns: Representative Tholman and others noted that commercial and agricultural property owners would continue to carry the 60‑mill classification under the bill as drafted, which could shift the visible distribution of tax burden (even if total dollars to education remain the same). Lausser and witnesses said the bill aims to preserve local control for large capital decisions and that addressing every class equally would raise the total cost substantially.

Supporters and testimony

- Dr. Amy Copas, executive director, North Dakota Council of Educational Leaders, told the committee the bill contains “language in this bill that works really well for schools” and identified provisions that, in her view, would help preserve K‑12 funding stability while providing relief.

- An executive director from the North Dakota School Boards Association and representatives from the Association of Counties, the League of Cities and the North Dakota Farm Bureau testified in general support and offered to provide data and technical input to the committee.

Opposition, technical and implementation questions

No formal opposition witnesses appeared at the hearing, but several lawmakers and witness organizations asked for additional data and fiscal analysis. Members asked how the change would show up on annual tax statements, how the state would account for per‑pupil funding in subsequent bienniums, and how credits (if used in other proposals) would be administered and prorated for sales that occur midyear or when a property’s use changes.

Lausser told the committee he prefers a buyout rather than an annual homeowner credit because he said credits would require recurring certification by property owners and could create escrow and proration complications if ownership or use changes midyear.

Next steps

Committee members did not act on the bill at the hearing and asked for additional fiscal details and modeling. The hearing record closed after lawmakers heard testimony from school, county and municipal associations and other stakeholders.

Ending

The committee recessed without taking a vote, leaving House Bill 1168 pending further fiscal analysis and potential amendments.