Driver’s License Fee Increases, a New Lodging Tax, & the Property Tax Shift

For more reasons than we can discuss here, North Dakota’s 2019 Legislative Session has largely been a disappointment— especially when it comes to taxes. For example, last month we published an article explaining a number of bills that had the potential to bring property tax relief— all were defeated. Days after that article, we published another one on three separate bills that have the potential to actually raise property taxes. Oh, and we shouldn’t forget the proposals to eliminate the income tax, which saw more red votes than green.

Yes, its been a tough session for the taxpayer and minority of legislators who truly understand and support fiscal conservatism. Unfortunately, we now have more bills to add to the heap of problematic examples.

Last week the House passed Senate Bill 2244, which seeks to raise driver’s license fees. We warned you back in August of 2018 that this was coming and wrote about it again two weeks ago in the aftermath of it passing the Senate. The justification for the increase was basically two-fold— there hadn’t been an increase since 1987 and the department was short roughly $5 million. Of course, nobody mentioned the fact that this same legislative body has been throwing roughly $5 million in unconstitutional subsidies at the ethanol industry from the same fund they’ve been taking the $5 million from to make up for the driver’s license shortfall. Indeed, taxpayers will be dinged from two angles now.

Today the House passed Senate Bill 2192, which literally creates a new lodging and restaurant tax for counties. The justification for this one? Well, in the minds of those who supported it, it puts counties on an even playing field with cities who can already collect these taxes. Oh, and let’s not forget the tourism angle, as it also creates a “County Visitors’ Promotion Fund” for the dollars to be funneled into as a means of promoting counties. But never you mind. According to Rep. Craig Headland (R – District 29), the House Finance & Taxation Committee didn’t look at this so much as a new tax for our citizens as it is a promotional tool. In fact, according to Rep. Headland, they weren’t even “worried about the burden of a little extra tax”.

In addition to SB 2192, the House also passed Senate Bill 2360 today. I’ll leave the details up to you, but in a nutshell it raised the property tax exemptions for farmers. On the surface, this will sound wonderful to some— especially those who benefit from it. But as Rep. Ben Koppelman (R – District 16) explained, exemptions like this are simply tax shifts. And with increases like those found in the bill, the shift will be even greater. What’s interesting about this vote is that Rep. Clayton Fegley (R – District 4) attempted to declare a conflict of interest — because he’s a farmer — but Speaker of the House Lawrence Klemin (R – District 47) denied Fegley’s request to be exempt from voting. Why? Because with the number of farmers in the legislature, Klemin said there likely wouldn’t have been enough members to actually hold a vote if such a conflict was acknowledged— a fascinating admission.

I suppose we should give the Legislature some credit. While the House also passed Senate Bill 2355 today, it was in the form of a study— not an actual tax. In its original form, the bill was a tax proposal on electronic smoking devices. But it was amended into a study on the Senate side where it passed 46-1. The House passed it by a narrow margin of 49-43. This will allow Legislative Management to look into the issue of taxing liquid nicotine and electronic smoking devices during the interim and then report their findings to the legislature in time for the 2021 Legislative Session.

So, yeah, considering all the problematic votes, maybe converting a tax proposal into the study of taxing is the 2019 Legislature’s version of restraint. And to think that some people believe that the majority are actually Republicans.

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Sources:

1. https://theminutemanblog.com/2019/02/14/north-dakota-house-rejects-bill-to-reform-property-tax/
2. https://theminutemanblog.com/2019/02/18/nd-house-senate-each-pass-bills-that-can-increase-property-taxes/
3. https://theminutemanblog.com/2019/02/15/tax-spend-the-floor-speech-every-north-dakotan-should-hear/
4. https://www.legis.nd.gov/assembly/66-2019/bill-index/bi2244.html
5. https://theminutemanblog.com/2018/08/10/north-dakotans-may-face-increase-in-fees-for-drivers-licenses-motor-vehicles/
6. https://theminutemanblog.com/2019/03/04/nd-house-set-to-hear-senate-bill-that-proposes-raising-drivers-license-fees/
7. https://theminutemanblog.com/2018/12/18/ag-punts-in-opinion-on-constitutionality-of-ethanol-subsidies/
8. https://www.legis.nd.gov/assembly/66-2019/bill-actions/ba2192.html
9. http://video.legis.nd.gov/en/PowerBrowser/PowerBrowserV2/20190318/-1/12118?startposition=20190318133650
10. https://www.legis.nd.gov/assembly/66-2019/bill-index/bi2360.html
11. https://www.legis.nd.gov/assembly/66-2019/bill-index/bi2355.html