A BILL for an Act to create and enact two new sections to chapter 54-27, two new sections to chapter 57-02, and a new subdivision to subsection 1 of section 57-55-10 of the North Dakota Century Code, relating to a legacy earnings fund, a legacy property tax relief fund, a state reimbursed taxable valuation reduction for residential, agricultural, and commercial property, limitations on taxable valuation increases, and voter-approved excess levy authority; to amend and reenact section 6-09.4-10.1, subsection 1 of section 21-10-06, section 54-27-19.3, subdivision c of subsection 1 of section 57-02-08.1, subdivision b of subsection 2 of section 57-02-08.1, and section 57-02-08.10, of the North Dakota Century Code, relating to funds invested by the state investment board, the homestead tax credit and renters refund, and the primary residence credit certification and state reimbursement; to repeal sections 21-10-12, 21-10-13, and 57-02-08.9 of the North Dakota Century Code, relating to legacy fund definitions, the legacy earnings fund, and the primary residence credit; to provide an appropriation; to provide for a transfer; to provide an effective date; and to provide an expiration date.
HB 1575 would restructure how North Dakota uses a portion of legacy fund earnings and would create several new funds to direct those dollars toward debt service, highway-related spending, and property tax relief. The bill establishes a legacy earnings fund, from which the state treasurer would first set aside money for the legacy sinking and interest fund, then direct a fixed amount to highway distributions, and send the remainder to a new legacy property tax relief fund. It also creates a legacy property tax relief fund and ties it to a large biennial appropriation and transfer from the general fund and legacy earnings fund.
The bill also expands and modifies property tax relief mechanisms. It increases the homestead tax credit income thresholds and raises the renters refund cap, repeals the existing primary residence credit, and replaces it with a new state-reimbursed taxable valuation reduction for residential, agricultural, and commercial property. That reduction would be 2.75 percent for residential property and 1.5 percent for agricultural and commercial property, with counties and the state reimbursed for the resulting lost tax revenue. In addition, the bill limits annual taxable valuation increases on parcels to 3 percent unless improvements are made, and it allows voters to approve temporary excess levy authority for taxing districts at a statewide general or primary election.
The bill would make significant changes to state law governing legacy fund earnings, property tax credits, county certification and reimbursement procedures, and the treatment of taxable valuation for mobile homes and real property. It also repeals statutes tied to the prior legacy earnings framework and the primary residence credit. The fiscal structure is substantial: the bill appropriates $483.4 million for the valuation reduction program for the 2025-27 biennium, including a transfer of $85,001,793 from the general fund and the remainder from legacy earnings.
Overall sentiment appears mixed but initially favorable in the House and strongly unfavorable in the Senate. The House second reading passed overwhelmingly, 86-5, suggesting broad support for property tax relief and the use of legacy earnings for public purposes. However, the Senate second reading failed decisively, 0-46, indicating that the chamber did not support the bill in its introduced form.
The main points of contention likely centered on the size and structure of the property tax relief package, the use of legacy fund earnings, and the shift from the existing primary residence credit to a broader valuation reduction. The bill also raises policy questions about limiting valuation growth, the scope of state reimbursement to local governments, and whether voter approval should be required for temporary levy increases. These issues would affect homeowners, farmers, businesses, renters, counties, cities, school districts, and other taxing districts.
HB 1575 would substantially amend North Dakota’s tax and legacy-fund statutes by creating new legacy earnings and property tax relief funds, changing how legacy fund earnings are distributed, and replacing the primary residence credit with a new statewide property tax valuation reduction. It would also revise the homestead tax credit and renters refund, impose a 3 percent cap on annual taxable valuation increases for parcels, and establish a voter-approval process for temporary excess levy authority. The bill would require new county certification, state reimbursement, and distribution procedures for property tax relief payments and would repeal prior legacy fund and primary residence credit provisions.
The bill appears to have drawn strong support in the House, where it passed second reading by an 86-5 vote, suggesting substantial agreement with its property tax relief goals and use of legacy earnings. In the Senate, however, it failed on second reading by a unanimous 0-46 vote, indicating clear opposition or lack of support in that chamber. The voting pattern suggests the proposal was politically significant but ultimately not acceptable to the Senate in its final form.
The most likely areas of disagreement were the bill’s fiscal magnitude, its reliance on legacy fund earnings and a general fund transfer, and the policy choice to replace existing targeted credits with a broad valuation reduction. Some lawmakers may have favored direct property tax relief, while others may have objected to the cost, the complexity of the reimbursement system, or the effect on local taxing authority. The 3 percent cap on valuation increases and the requirement for voter approval of excess mill levies could also have been contentious because they constrain local government revenue growth and shift more control to statewide voters.