GRAND FORKS – If a ballot initiative eliminating state property taxes passes on Election Day, it could paint a dire picture for Grand Forks Public Schools, district Superintendent Terry Brenner said Friday in a district Government Affairs Committee meeting.
An impact study on the measure conducted by the North Dakota Council of Educational Leaders found that if passed, Measure 4 would result in a loss of more than $617 million to the state’s K-12 schools, a “significant portion” of the state’s more than $2 billion education budget.
Locally, the potential loss for Grand Forks Public Schools is between $30 million and $36 million. The district’s
is $130 million.
“If there’s not a plan to supplant that, that would have huge implications …” Brenner told the Herald. “We’re just anxiously awaiting the results of Nov. 5.”
Measure 4 seeks to end property tax payments as they currently exist, leaving the state to pay the current rate going forward. Any future increases would be funded by the taxing entities through various methods, possibly including various fees or other forms of taxes.
Should Measure 4 pass, it would be up to the Legislature to find the monies to fill the annual $1 to $1.3 billion gap left by state property tax revenue. Proponents of the measure say it can come from earnings from the state Legacy Fund, a public account now worth more than $10 billion that collects taxes on the state oil industry. Opponents say that leaves the question of where the money will come from when the Legacy Fund runs out.
At this time, “there really isn’t an alternative plan” to address the potential legislative budget shortfall, Brenner said in the Friday meeting. The adoption of the measure also has the potential to upend the upcoming legislative session, potentially impacting the district’s other legislative priorities, such as additional pre-K funding, board members noted.
It’s too early to know where the necessitated cuts would be in the district budget should Measure 4 pass, Brenner said in an interview. According to the NDCEL impact study, however, “Without property tax revenue or a solid plan to replace it, reduced funding would likely lead to program cuts, fewer teachers and delayed maintenance. This could lower the quality of education for North Dakota students and affect academic outcomes.”
Additionally, “The amendment would also limit the ability of school districts to raise funds through general obligation bonds. For communities that are growing and/or need new or renovated schools, this restriction could halt critical development and maintenance projects,” according to the study.
At the Friday meeting, committee members in attendance agreed on the importance of stressing the issue to voters. Board member Amber Flynn noted that the district and School Board want to be partners in property tax reform, and that as much as the district wants and needs those dollars, they’re also aware that lower taxes help move people into the community.
However, she said she believes many voters don’t understand the unintended consequences of eliminating state property taxes.
“It’s not like we’re trying to shy away from those conversations – certainly some sort of reform is necessary,” Flynn said. “But we all need to work together to understand how elimination affects people’s bottom lines, too.”
The passage of the measure would result in a loss of local control, Brenner added. According to the NDCEL study, the amendment would remove the authority of local school boards to make funding decisions. Voter-approved building funds – funds used to maintain school buildings – would disappear, and the supermajority 60% vote by residents to approve building funds would be lost with no option to vote to maintain or approve such revenue. As a result, residents “will lose their ability to decide what they want in their towns,” the study said, citing North Dakota Century Code.
“We would simply be at the mercy of the state,” Brenner said.
Surveys conducted by the NDCEL appear to show a shift in public support for Measure 4 in recent weeks. Two months ago, survey respondents were roughly split between yes and no votes, Brenner said in the meeting. A survey conducted about two weeks ago found respondents much more in favor of a no vote.
“That doesn’t mean anyone should take their foot off the accelerator in terms of talking about what this would mean for school districts,” Brenner said.
The government affairs committee will invite local legislators to its next meeting on Nov. 21 to discuss its legislative priorities for the upcoming session.