December 30, 2013

Tax bite will be smaller for many

By Kate Ruggles
Farmer Staff Writer

McKenzie County taxpayers may find that their property tax statements look a little different this year in more ways than one. Not only has the statement’s appearance changed due to the addition of extra lines from the state of North Dakota, but the formula used to figure this year’s property tax liability has changed to reflect an increase in valuations for residential, commercial and agricultural land in combination with property tax relief issued by the North Dakota Legislature.
According to McKenzie County Auditor Linda Svihovec, property valuations increased 76 percent this year. But because of an increase in new commercial properties and pipeline utilities, along with a 12 percent across-the-board property tax relief issued by the state, it will not actually be as bad as it sounds for taxpayers.
“There were so many factors involved with this year’s formula that there really is no simple way to explain how it affected everyone,” states Svihovec.
In general, Svihovec states that the majority of people who own agricultural land will see a decrease in their property tax liability, while a residential land owner’s tax liability will depend on how much their home increased, or did not increase, in valuation.
“Some residential land owners will see an increase in the amount they owe for property taxes and some will see a decrease,” states Svihovec. “If someone owns a property whose valuation increased significantly this year, then they will probably see an increase.”
Commercial property owners and pipeline and utility land owners could actually see the most difference in their valuations, and therefore, in their tax liability, says Svihovec.
In 2012, second to pipeline utility land, agricultural land increased the most with a 25 percent increase in valuation. However, in 2013, agricultural property valuation only accounted for 15 percent of the total valuations for McKenzie County. The bulk of the valuation total for McKenzie County is held by commercial property owners and pipeline utility land owners.
According to Svihovec, commercial property makes up 22 percent of the total valuation for the county, and pipeline utility lands make up 49 percent, or a combined 71 percent of the total of McKenzie County’s valuations, which means that agricultural and residential properties account for the remaining 29 percent of the total of McKenzie County’s valuations.
In all, McKenzie County’s total 2013 property valuations increased more than $35 million over 2012. 2012 valuations totaled $46,539,018, while 2013 valuations totaled $81,996,121.
But that increase will not be felt as strongly as some would think, due to an increase in commercial property and pipeline land.
“Because property valuation increased so much, the increase in property taxes will be absorbed by the increase in pipeline utilities and new commercial properties,” states Svihovec.
Additionally, a 12 percent property tax relief issued to every North Dakota resident for the 2013-2015 biennium will also help shoulder the burden of rising property values in McKenzie County.
According to Svihovec, the amount of total property tax liability due in McKenzie County is $10,907,509. But, because the state is paying 12 percent of that debt, the actual amount being paid by McKenzie County residents is $9,753,317. In 2012, that number was $6,779,233.
This year’s statements arrived later than usual, due to format changes which were mandated by the state of North Dakota.
“We normally get the statements out in the first couple of weeks in December, but we had some holdups this year,” states Cheryl Grantier, McKenzie County treasurer.
Grantier states that she had to add additional lines to this year’s property tax bill, which changed the appearance and format of the bill.
“We use perforated paper, and because of the additional lines, we needed to order new paper for this year’s statements. And it did not come in on time,” states Grantier.
According to Svihovec, the state of North Dakota wanted a line added to the tax statement to reflect the 12 percent discount that each resident was being issued. In addition, the state also wanted a line added to show the money being sent to the resident’s school district on their behalf thanks to the state’s School Levy Buy Down.
“I am afraid the addition of this line will be confusing for some residents,” states Svihovec. “The School Levy Buy Down is not actually being deducted from the resident’s tax liability total because it did not figure into the 2013 tax liability formula. However, the state wants each resident to know how much money is being sent to the school on their behalf through the buy down program.”
Svihovec states that the state sends money directly to the schools so that school districts are not put in the position of having to levy a huge amount from taxpayers. Because the money is sent directly to the schools, it does not figure into the landowner’s tax liability bill. But the state wanted each resident to be aware of how much money was being sent to the school.
Grantier states that essentially the statements will look the same, except for the lines that were added from the state property tax relief and the School Levy Buy Down.
This is the first year of tax statements that will show the property tax relief issued by the state of North Dakota.
The deadline for property tax payments is March 3, 2014. Anyone wishing to receive a five percent discount on their 2013 payment must pay their taxes by Feb. 18, 2014.