N.D.: Wealthy taxpayers and poor governments
North Dakota is rich incredibly rich.
According to figures compiled by Governing, a state and local news magazine, eight of the 25 richest counties in the United States are in North Dakota.
Six of those eight counties Williams, Slope, Billings, Dunn, Mountrail and McKenzie – can attribute much of their wealth to the oil industry; the other two counties Steele and Wells can be explained by agricultural prosperity.
A United States map of counties showing counties with increases of 14 per cent or more in real per capita personal income from 2007 to 2012 revealed that North Dakota was the only state in which the residents in every county prospered to that degree.
This means that prosperity is spread throughout the state, much of it attributable to farm income during the five-year period of 2007 and 2012. (Figures for the less prosperous farm year of 2013 apparently were not available at the time these computations were made.)
In that five-year period, personal per capita income in Wells County grew by three-fourths, reaching $78,000 while the national average reached $44,600.
On the basis of an interview with Wells County Commission Chairperson Randi Suckut, Governing observed that even though this prosperity is pervasive in North Dakota, it doesn’t mean that local governments will benefit.
When it comes to roads “local government is strapped for funds because the citizens don’t want to spend the money to pay for it,” the magazine noted.
This observation is supported by the two state committees now meeting to draft legislation that would change the property tax. The ultimate goal of these two committees is to restrict the flexibility of local governments and, they hope, reduce or curtail property taxes.
According to calculations by the Tax Foundation, the owner-occupied homes in North Dakota pay a tax of 1.42 percent of market value. South Dakotans pay 1.28; Minnesotans pay 1.05, and Montanans pay 0.83.
North Dakota property taxes on non-agricultural land are above the national average and warrant continued analysis of their role in the tax system.
But Governing is right in noting that local government services well benefit little, if at all, from the private prosperity of North Dakotans.
Resistance to taxation is a manifestation of the North Dakota political culture that evolved from the frontier days when government services were primitive and often unavailable. Distance forced self-reliance.
Our settlers learned that government wasn’t all that necessary. The smaller the better, in fact. This attitude has prevailed throughout state history and all of our state and local governmental institutions reflect it.
So if we can get along with minimal government, we don’t need taxes. One way to keep it minimal is to restrict taxes. So, as far as most North Dakotans are concerned, the two committees now looking at curbing property taxes are in harmony with people’s expectations.
Experiencing the same settlement in the vast prairies, South Dakotans have the same attitudes as North Dakotans about taxes. However, we see a different picture in Minnesota. The frontier did not have the same impact in Minnesota.
Minnesota believes in greater expenditures for quality public services. The difference can be explained, at least partially, by the influence of the urban areas on public policy.
North Dakotans may be experiencing unprecedented prosperity but that will not change our cultural orientation toward government services. Consequently, Governing magazine is right. Governments will benefit little from the current prosperity.
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