AFTER much debate, a conservative state dominated by Republicans has rejected elimination of a major tax. We're not talking about Oklahoma's effort to repeal the state income tax, but North Dakota's opposition to property tax repeal.
Thanks to a boom in oil and gas drilling, North Dakota has the nation's second-lowest unemployment rate and state coffers are overflowing. Revenue surged 44 percent last year. In response, an initiative was submitted to end local property taxes, potentially saving citizens $800 million. Under the proposed constitutional amendment, state funding would have made up the difference for local governments.
The measure was predictably opposed by tax consumers, but also drew opposition from those who would seemingly benefit. The North Dakota Stockmen's Association opposed the measure even though ranchers were facing higher property taxes as land prices increased. Like Oklahoma, North Dakota experienced an oil boom in the 1980s that turned bust. Memories of that event made voters wary of eliminating a revenue source if it meant overdependence on others, preferring a diversified tax structure. In the end, more than 76 percent of North Dakota voters opposed the initiative.
A similar scenario played out in Oklahoma this year when Gov. Mary Fallin called for phasing out the state income tax. While special-interest pleading played a role in the defeat of the plan, so did concern that it would leave Oklahoma dependent on only a few volatile sources of revenue instead of spreading the burden across multiple tax streams.
Talk of repeal was soon jettisoned and replaced by talk of restructuring or straightforward rate reduction. Eventually, even those discussions were abandoned because no agreement could be reached. Oklahoma's income tax rate went unchanged.