On April 26, 2017 Governor Doug Burgum signed legislation that was intentioned to create permanent, sustainable property tax relief by transitioning county social services costs to the state but instead may cause some problems for residents of Cavalier County.
By Melissa Anderson
Senate Bill 2206 provides $160.7 million for a two-year pilot program that eliminates counties’ social services levy – up to 20 mills – and requires the state to pay the costs of county social services and economic assistance for 2018 and 2019. In turn, the state will discontinue its 12 percent property tax relief credit program, better known as the buy down program.
“Senate Bill 2206 gives permanency to a significant amount of property tax relief and is a more cost-effective and sustainable option than the buy down program, which lacked incentive to control local spending,” Burgum said. “Shifting the cost of social services to the state relieves counties of unfunded state and federal mandates and ensures that local taxpayers aren’t stuck footing the bill for services outside of their control.”
Under the bill, counties will be reimbursed for social services costs based on their actual case loads. The state Department of Human Services (DHS) will analyze ways to improve the efficiency and effectiveness of social services delivery and submit a plan to the 2019 Legislature for a permanent funding formula.
The bill was approved 44-3 in the Senate and 75-15 in the House and had the support of the North Dakota Association of Counties. The District 10 North Dakota State Legislature delegates of Senator Janne Myrdal and Representatives Chuck Damschen and Dave Monson all voted in favor of the bill in their respective houses. The bill itself is part of more than $1.1 billion in state-funded property tax relief that will be provided in 2017-19.
“We are deeply grateful for the countless hours spent by legislators, county officials, the tax commissioner’s office, DHS staff and everyone else who worked on this historic legislation that will provide substantial relief to local property tax payers for years to come,” Burgum said.
Leading up to the passage of the bill in both the House and the Senate, the Cavalier County Commission discussed the bill and the effects it would have on the county and its residents not to mention the Cavalier County Social Services Department. Commissioner Stanley Dick gave updates to his fellow commissioners leading up to the final passage and shared his concerns with them about what the bill would do to the county budget.
Jill Denault, Director for both the Pembina County and Cavalier County Social Services, is also concerned for how the bill will possibly impact the two counties she oversees.
“This is what has passed and now we need to deal with it,” Denault said. “The very early projections don’t look bad and we should be okay,” she added.
Denault believes the bill was passed with good intentions as a starting point for taxpayer relief. The bill will implement a two year pilot program to determine if this will be a successful means of combating high property taxes in the state. After the two years are done, the system will be reviewed, and if any changes need to be made, they will be done at that time.
“There is also a study in this bill to really look at all the costs that come with implementing this change,” Denault explained. “There are still some costs in some counties that aren’t accounted for such as States Attorney time, County Auditor time, as well as other things we may not realize just yet.”
For Denault, a positive outcome of the two year study would be to show just how crucial social services is to the communities located in Cavalier and Pembina Counties.
“I hope the study will show the necessity of services in the rural counties, not just social services but behavioral health services as well,” Denault said. ”We just don’t have the services available that the larger areas do. We are really lucky to have therapy services located in Langdon.”
Over the course of the study, Cavalier Social Services intends to not let the change impact the services that are provided to those who need it.
“We are still required to provide the same level of services, and that is what we will do,” Denault stated.
During the next two years, Denault also does not anticipate that there will be any consequences for staff who provide and serve the county, however, she does caution that while the next two years may not see a change, she cannot predict what the department will look like four years down the road.
The North Dakota Associations of Counties(NDACo) was a strong proponent of SB 2206 as they have worked for more than 10 years to make a significant change in how this state- and federally-mandated program is provided within North Dakota counties. NDACo notes in their legislative blog that a major part of their endeavor was to alleviate the burden of funding from being on the counties and instead transferring the responsibility to the state.
“We knew going in that this would be a difficult session, especially when it came to any funding, issues. Of course, the counties greatest accomplishment is the passage of social service funding as the mechanism to deliver tax relief to North Dakota citizens,” the NDACo states in their blog post dated May 3, 2017.
Now that the bill has passed, smaller counties such Cavalier County will be focusing on how this legislation will directly affect them. Cavalier County Auditor Lisa Gellner and the Cavalier County Commission are looking ahead to budget time and how this change will impact the budgeting process.
“The county will remove the mills they have been levying for social services and budget according to the allowance the State gives for that department,” Gellner explained.
Cavalier County Social Services will get an estimated amount of funding that will be used for budgeting purposes, which will be funded directly from the State. The estimated amount of funding will be found by the State once they review social services prior year’s caseload’s mid-year and adjust the second distribution accordingly. In return, the county will be able to remove the mills used for social services, which was around 10.93 mills for Cavalier County in 2016.
From the county perspective, this change does not do much in terms of dramatic changes in regards to the budgeting process at this time as it only redirects the funding from county level to state level. It does however, remove a program that was assisting Cavalier County taxpayers. In return for covering the Social Service budget, all taxpayers across the State will lose the 12 percent discount the State was giving on real estate taxes.
“The 12 percent discount from the State on real estate taxes has been a larger savings for the taxpayer than the reduction they will get from removing the mills for social services, but it was not likely that the State was going to continue giving the full 12 percent discount on real estate taxes for the upcoming year,” Gellner explained.
Much like Cavalier County Social Services Director Jill Denault, Gellner is optimistic that the first two years of the program will have little to no impact on residents and those who utilize social services.
“There will be questions along the way with the new system, but hopefully it will be a smooth transition in funding for social services,” Gellner stated.