(NorthDakotaMonitor.com) – Local government leaders told lawmakers Tuesday they’re ready to work on property tax reform, but expressed concerns about the state capping their budgets.

The House Finance and Taxation Committee took testimony on a bill that incorporates Gov. Kelly Armstrong’s plan to put most homeowners on a path to paying zero property tax.

Rep. Mike Nathe, R-Bismarck, the lead sponsor of House Bill 1176, said the extensive property tax relief and reform proposed is a response to what voters want.  “They are demanding we do something and we do something now,” Nathe told the committee.

The bill increases the primary residence tax credit from $500 to up to $1,550 beginning this year. It also limits local property tax budgets to a 3% increase each year. The bill would allow political subdivisions to carry over unused increases and go to voters to seek additional increases.

Matt Gardner, executive director for the North Dakota League of Cities, said mayors across the state support the bill and want to be part of making it “workable.”  He suggested a cap that is tied to the rate of inflation, citing rising costs cities have faced in recent years.  “Paving a road, or buying a firetruck, a squad car, those types of costs, you know we don’t really control those costs and that’s a form of the market,” Gardner said.

North Dakota Gov. Kelly Armstrong also spoke in favor of HB 1176:

The bill is estimated to cost the state $535 million for 2025-27, based on an update presented Tuesday. It would be partially funded with earnings from the Legacy Fund, the state’s oil tax savings account.

Armstrong and other proponents say the property tax relief could eventually be fully funded with Legacy Fund earnings, reducing the cost to the state’s general fund. If the bill passes, the legislation would still need to be revisited again in future sessions.