North Dakota votes 'no' on ending property tax

@CNNMoney June 13, 2012: 6:47 AM ET

NEW YORK (CNNMoney) -- Voters in North Dakota, where the economy is swelling with money from the oil boom, have voted against abolishing property taxes in the state.

More than 76% voted "no" in Tuesday's initiative to get rid of the property tax, according to returns from the North Dakota Secretary of State.

North Dakota boasts the lowest state unemployment rate in the country and has become the nation's second-biggest oil producer. As a result of the energy rush, government coffers are flush with revenue.

The proposal, known as Measure 2, would have amended the state's constitution. If it had been approved, North Dakota would have been the only state without a property tax, according to the Tax Foundation, a research group that advocates for lower taxes.

Connie Sprynczynatyk, executive director of the North Dakota League of Cities and an opponent of the proposal, said there is no guarantee that the oil boom revenue is here to stay.

"North Dakotans have long been fans of local control," she said. "We were confident as soon as people realized the measure's dramatic shift away from local control, they would not support the measure."

Property tax is assessed based on the estimated value of a property. It is typically the source of a steady stream of revenue to fund government projects. At the same time, anti-tax advocates often identify it as a burdensome hit to homeowners.

Charlene Nelson, head of Empower the Taxpayer, the grassroots organization pushing Measure 2, had wanted to eliminate a tax that she considers unfair because it pushes many local citizens out of their homes who are on fixed incomes or have lost their jobs.

The economic boost of the new oil boom would have made this the perfect time for North Dakota voters to ban the property tax, she said.

While tax revenue at all the states grew an average of 9% last year, North Dakota's revenue surged 44%, according to Joe Henchman, vice president of legal and state projects at the Tax Foundation. From 1997 to 2011, the state's tax revenue has increased about 10% per year, while nationally it has risen about 4% per year.

The $800 million the state would have forgone in annual tax revenue represents about 23% of North Dakota's state and local tax revenue, according to the Tax Foundation.

Local governments opposed to the measure were worrying that the revenue hit would jeopardize funding for school systems, infrastructure projects and other key programs.

A number of states have discontinued income tax when they had another revenue source they could rely on instead. Alaska and Texas, for example, did this when they realized they generated enough tax revenue from oil, Henchman said. To top of page

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