CCEC opposes Measure 2

Measure 2 will appear on the June 2012 ballot and proposes to eliminate property taxes in North Dakota. Because of the way Cass County Electric is taxed, if Measure 2 passes, the Cooperative will still have to pay property tax. The Cooperative feels this is unfair. Our neighboring investor-owned utilities will be free from property tax, while CCEC will continue to pay each year. CCEC paid over one million dollars in 2011 in property taxes. Since CCEC is member-owned, it is essentially the members who will have to continue to pay this money, while their neighbors will not.

“It is an unintended consequence if the measure passes. Electric cooperative and telecommunications company property tax is determined by sales or revenue, not by assessed value and will therefore not be eliminated if Measure 2 passes,” said Scott Handy, president and CEO of Cass County Electric Cooperative.

North Dakota Tax Commissioner Cory Fong has spoken out about Measure 2. He has said that Measure 2 is the most important issue this election season. “The consequences are great,” he said.

Fong pointed to three concerns: loss of local control, shifting taxes from one source to another and the uncertainty it will create, if passed.

“We believe in local control. This particular measure hands this over to the legislature. Not that the legislature doesn’t do a good job, but when you hand over control of 2,100 political subdivisions, something gets lost. More importantly, you start to get a government that is farther away from the people,” explained Fong.

Fong also cites a tax shift if the measure passes. He says during the first fiscal year there will be an $812 million loss of revenue that will have to be made up from the state. “People think we have all this money and we can absorb it. In my opinion, we will have to consider raising other taxes. I don’t set tax rates, that is the legislature’s responsibility. In my position of tax commissioner, I have a bird’s eye view of how it works and I just don’t see how we are going to absorb $1.6 billion in a biennium,” he said.

Many people point to a surplus of money from the oil industry. Fong said much of the oil money is obligated. The amount that would be available wouldn’t cover what is lost if property taxes are eliminated. In addition, oil and gas revenue is a very uncertain source. It is a commodity that we have little control over. Fong said “It is a risky business for us to rely on oil and tax revenue for general funding of government.”

The third concern Fong points to is uncertainty. Fong points to questions in the measure itself; the language of the measure, which he states, leaves a lot of uncertainty. “It implies that the legislature is supposed to fully and properly fund local government. Properly is discretionary. That is a concern for me and a concern for many out there,” he said. “Cass County Electric is another perfect example of uncertainty. Cass County Electric pays an in lieu property tax and it will stay in place. Investor-owned utilities pay ad valorem property taxes, which will go away. Here, you have two industry competitors that offer the same service and will be treated differently. This will lead to uncertainty.”

Right now, Fong believes we have a very balanced tax structure and a good overall business environment in the state. “My concern about measure 2 is that it will turn it all upside down,” stated Fong.

Krista Mund, a Cass County Electric Cooperative member, has many concerns with Measure 2. “The two main problems that stand out are, number one, the non-specific way it is written and, number two, the consequences it will have on our local governments by giving control of money to fund local projects to the North Dakota legislature,” said Mund.

Mund, who lives in Fargo with her husband and 10-year-old and 5-year-old daughters is concerned that local funding will be in jeopardy if Measure 2 passes. “The affect of Measure 2 on local funding worries me because it takes control away from our local city commission, park board, etc., and places the burden on our state legislators who will have to come up with ways of funding our schools, parks, snow removal, fire protection, and more,” she said.

While the reasons to oppose Measure 2 are obvious to Mund, she believes there is a very real chance that the measure could pass come June. “Property taxes are a pressing issue in our state. Some residents may hear about the measure in general terms and think that the idea of no property taxes sounds attractive. Sure, it sounds wonderful at first blush, but once you start breaking down the measure language and learning about the consequences that could result, I hope that people will realize the prudent vote is a ‘no’ vote,” explained Mund.

CCEC urges its members to research Measure 2 and make an informed decision before voting on June 12. There are two opposing groups who lead the way in opposing and in-favor of the measure. Keep it Local North Dakota Coalition opposes Measure 2; their information can be found at keepitlocalnd.com. The group in favor of Measure 2 is Empower the Taxpayer and their information can be found at empowerthetaxpayer.org.

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