ND Tax Commissioner Ryan Rauschenberger tells us how much your property taxes may be going up

FULL TRANSCRIPT:

(Please note - this transcript was copied from an electronic captioning service. We apologize for any errors, spelling, grammatical, or otherwise.)

Chris Berg:
Joining us in studio, North Dakota Tax Commissioner. Great to have you here, sir.

Ryan Rauschenberger:
Thank you for having me here.

CB:
We know tax season, we may get to that. We may not. Let's start with this. Everybody is talk being the current numbers in the legislature. They don't sound good. We have Representative Marvin Nelson on last night saying this budget is not sustainable. I think for many people you start talking all these numbers, you get in the clouds. Let's put it at people's dinner table tonight. You see these numbers. How bad is it and what does that ultimately mean for people's dinner table here in North Dakota?

RR:
Well, I think that there is a lot to talk about when it comes to revenues. We have been reducing forecasts which actually has a huge impact on budgets. So we've been reducing those revenue forecasts for the next biennium. The legislatures have a tough job in front of them. They're shrinking budgets, whether it has to be human services or K-12 or actually higher education because that makes up 70% of the general fund. You cannot cut budgets significantly across the board without cutting certain parts of education, specifically high education, but also human services. So those are difficult choices in front of the legislature. But in general, sales tax, for example, has been coming in quite a bit lower than we thought it would be two years ago. That's part of the problem with budgeting. We don't know what's going to happen two years from now. So we've reduced those forecasts. I think we're starting to make a turn. We're starting to meet the new revised forecast and oil just this morning, I verified probably over a million barrels of oil again starting in February. We're starting to see this turn around in the oil sector because oil tax, for example, helps fund things like flood protection, education, property tax relief, all of these things and the legacy fund, which also helps to fund the general fund.

CB:
How do you translate that into the average Joe and Jane at home, having dinner and put all this information at the dinner table going hey, for the average Joe and Jane, this means they should be cautious of what? If cautious at all, what would you say to them?

RR:
I think the legislature is reducing budgets accordingly. Think about the way things were back in 2011. Budgets are being rolled back approximately to 2009, 2011 levels. We're right sizing government. That's when Governor Doug Burgum has been clear of. We're rolling back these budgets to these 2010-2011 levels, which is about the same level of revenues that we have today. So in North Dakota we have to balance the budget constitutionally. We will balance based on the incoming revenues we see in the future. Think about 2011 levels of services.

CB:
Representative Nelson said the budget the way it is unsustainable.

RR:
I would disagree from one standpoint is that we have $4 billion in legacy fund. We have billions of dollars in common school trust fund for K through 12 education. Last two funds are funded by oil. We still, even though we're coming in below revenue forecasts, we're still considered one of the most financially stable states in the union because we have billions of dollars in these endowment funds. Just like legacy that, can help the general fund.

CB:
So how specifically? You used a key word. Representative Nelson said there is no appetite to tap into the legacy fund. How are those things then making us financially stable if we're not able to access them?

RR:
One thing that's very important is that we do get access to and constitutionally 160 million of the earnings out of the legacy fund will help fund the general fund this next session.

CB:
Do we tap the legacy fund?

RR:
I don't think we should tap the legacy fund. If we let that balance grow, it's like a savings account. If we let that grow, sooner or later, we're going to be talking hundreds of millions of potentially billion or more going to the general fund just on earnings.

CB:
Let's talk about one of the things is a big discussion and you and I talked about a vote in the house today is this property tax buydown program going away. They're going to take overt social services situation potentially. The thing the Republicans have always said is we're not going to raise taxes. How do you get rid of this 12% property tax buydown program and yet not lay it on local taxes and have you talked to governor Burgum about how to ultimately -- this is a big conundrum. What are those conversations like with the governor how to solve this situation?

RR:
Well, governor Burgum and I have had discussions in the past and leading up to the session and during the session about property tax relief and more specifically, the 12% credit. That's what's being debated right now. And we've had discussions about that 12% just continues to grow and grow and grow. It's just a blank check to buy down local property taxes. There is no state control. And basically the social service funding which is actually in governor Burgum's budget to take over social service funding, then the state has control over how much things are costing as opposed to a blank check. So if you think about I think it's important to talk about this next biennium we'll have about even with this social service takeover, still over $1.3 billion of property taxes between school funding and social service funding that will go out the door compared to maybe 1.4 billion with the current tax credit.

CB:
The big distinction, average Joe and Jane, now we're taking over social services. What does it ultimately mean to my property tax bill?

RR:
If I look at my own property tax bill. I live in Bismarck, I ran the numbers and if everything goes in the direction it's going right now in the legislature, my property tax bill wouldn't change more than about $60.

CB:
So over the course of a year, you'll pay $60?

RR:
Exactly. I would potentially pay $60 more in the course of a year. Again, we're talking about 1.32 billion in tax relief.

CB:
I know. I hear you. But the person at home is going, I don't care about that. I want to know what it means at my dinner table.

RR:
This is not said and done yet. There is still more discussion.

CB:
Last thing, last time you were on, it's great you're doing this. Using the tax code to go to some of the DAPL protesters. Have you found any evidence to show that these people were getting paid to protest DAPL and two, where is this investigation at?

RR:
Well, we're in the middle of filing season. So really busy. We're working with fewer people because of budget crunches. So after the filing season is done, we'll have more information. We'll get more information from the IRS as far as who got 1099s and what didn't. And which companies, which entities that were pushing the protesters to be here and paying them. We'll have a much better idea of who to go after. So it isn't in the immediate process.

CB:
Do you think they're going to submit 1099s?

RR:
We'll see. Later this year.

If they have.

CB:
Great to have you here.

RR
Thanks for having me.



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