A constitutional initiative on North Dakota’s November ballot would prohibit all tax on real or personal property based on assessed value (except to pay for bonded indebtedness), which could make North Dakota the first state without property taxes. (Theoretically, lawmakers could adopt a new mechanism to tax property, such as a square footage model for real property, though such alternatives are flawed and unrealistic.) Repealing the property tax is an idea with obvious appeal—but it’s a choice that could come back to haunt North Dakotans.
The ballot measure would not deliver on the economic benefits anticipated by its supporters and would undermine the state’s economic competitiveness. There’s a genuine need for property tax reform and relief, but outright repeal of the property tax is unsound and would ultimately force a shift to more economically harmful taxes and to state control of local revenues.
The constitutional initiative has three main weaknesses: (1) moving North Dakota further away from the benefit principle of taxation, which holds that those who receive or benefit from public services should pay for them; (2) shifting responsibility for local revenue from local to state government; and (3) creating a structural fiscal deficit, nearly $1.3 billion per year, which would need to be replaced with other more harmful taxes at the state and possibly local level. These three factors would destroy local governments’ ability to make independent funding choices and reduce North Dakota’s overall tax competitiveness relative to other states with more stable and pro-growth funding mechanisms.
Notably, this measure comes in the immediate aftermath of the largest tax cut in state history. In 2023, Governor Burgum (R) signed HB 1158, which provided a tax credit of up to $500 for homeowners on their primary residence and $358 million in income tax relief. The bill also compressed the top four brackets into two and reduced rates.
Therefore, North Dakota residents are already benefitting from recent concrete legislative changes. The Tax Foundation publishes an annual index comparing the tax structures of each state and ranking them accordingly. In 2024, North Dakota ranked 17 overall, ahead of Minnesota (44), but behind both Montana (5) and South Dakota (2). North Dakota ranked in the top 25 states in all categories except sales taxes (32), with a property tax subindex ranking of 7. Notably, North Dakota collects less state and local property taxes per capita than neighboring states. Rather than upend an otherwise regionally competitive property tax, the state should build on recent reform efforts and seek ways to provide sound structural property tax relief.
