BISMARCK, N.D. (AP) — North Dakota voters this fall could largely end property taxes by approving a ballot measure that opponents say would significantly cut various state services but that supporters say would provide long-sought relief that the state can afford.

If adopted, the constitutional initiative would eliminate property taxes based on assessed value and require the Republican-controlled Legislature to replace lost revenue. A legislative summit estimated panel that total cost comes to $3.15 billion every two years – a huge number for a state that adopted a two-year general fund budget of $6.1 billion in 2023.

Opponents question what government services and initiatives would be cut to cover replacement income.

“It would be absolute chaos for the Legislature and for the appropriations process, something we’ve never done before,” said longtime state Rep. Mike Nathe, a Republican member of the House of Representatives. House Budget Writing Committee. “We will walk blind, to be sure, as to how to proceed.”

Money intended for Medicaid expansion, hospitals, nursing homes and education programs could all be strained, he said. Money for infrastructure projects would also be at risk, Republican House Appropriations Committee Chairman Don Vigesaa said. The Legislature may also have to cut budgets and staffing levels at state agencies, he added.

The measure’s leader, Rick Becker, countered that it was impractical to identify funding sources for the initiative, but that the state had enough money to fill any gaps. He said the Legislature could use revenue from the state’s $11 billion in oil tax savings as well as millions of dollars he said would go toward “corporate welfare” for corporations private sector and special interest groups. The state also has higher-than-expected revenues, he said.

“We are such a wealthy state per capita that we can actually make this conversion and afford it without raising taxes and without cutting services,” said Becker, a former Republican state representative.

More than 100 organizations spanning agriculture, energy, education, health care and other groups formed the Keep It Local coalition to oppose the measure. President Chad Oban described the move as a blow to an issue that deserves a more thoughtful approach.

A similar measure failed in 2012. Oban said he expected a narrower vote margin due to more frustration and political changes in North Dakota since 2012, but added that he was convinced that voters would reject the measure.

The measure would set replacement state revenue at the amount of property taxes collected in 2024, but Oban said tax revenue is expected to increase in future years.

To address this issue, Becker said local governments could tax property in other ways, as the measure only abolishes the tax on the assessed value on property. Becker suggested that cities could impose infrastructure maintenance fees based in part on road frontage, giving local governments a way to generate revenue beyond what the state would replace.

The Legislature could raise income and sales taxes, propose new or novel fees, or allow local governments to tax in different ways, Oban said. Sales tax increases could help big cities like Bismarck and Fargo, but it wouldn’t work for rural communities that don’t have a sales tax base to fund their schools and law enforcement, he declared.

Property taxes account for about $45 million, or a third of the city of Fargo’s budget, and about 40 percent of the budget goes to police and fire, Mayor Tim Mahoney said. North Dakota’s largest city has nearly 200 police officers and 150 firefighters, and it must offer competitive salaries to retain employees and attract new recruits, he said.

“Even the cost of living or things like that that happen every year, to stay competitive, if you have a fixed amount of money, you have to offset that somewhere, and that’s not an easy solution,” he said. Mahoney said. .

Last year, the Legislature passed a package of income tax cuts and property tax credits estimated at $515 million. The state has a strong financial picture, including strong oil and sales tax revenues.

Most of the measure would take effect on January 1, 2025 if passed.

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