NBC Anchor Brian Williams on North Dakota. Office of State Tax Commissioner Cory Fong, Tax Commissioner

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3 There is one place in the country, that if you are willing to work and willing to move, there is a job waiting for you. They are hiring people so quickly it feels like a different planet there. NBC Anchor Brian Williams on North Dakota

4 Help wanted signs are visible everywhere. Economists say it's not just the oil. They say (North Dakota) has a broad portfolio. Prices for agriculture, wheat and corn are up across the board. Farmers are doing well here. Manufacturing is also up -- meat plants and factories that make heaters are hiring, to name a few. ABC News Anchor David Muir on North Dakota

5 Major Industry Sectors 2011 & 2010 Accommodation & Food Services Financial, Insurance, Real Estate, Rental & Leasing Transportation & Warehousing Retail Trade $1,471,737,060 $1,274,012, % $999,532,040Retail Trade $511,637,334 $407,041,082 $222,352, % Mining $5,448,304,958 & Oil Extraction $4,761,325,306 Wholesale Trade $2,928,907,612 $4,394,667,152 Manufacturing Construction Mining & Oil Extraction $995,535,882 $712,357,981 $702,237,062 $491,957,895 $1,819,372,785 $3,609,963, $0 $2,000,000,000 $4,000,000,000 $6,000,000,000

6 North Dakota today is like a inverse image of the U.S. economy at large. The state's budget is balanced, housing prices are rising and the labor market is tight. A virtuous circle is in play. July 5, 2011 Yahoo! Finance

7 Trends in Oil and Gas Tax Collections Millions of Dollars $1,010 $960 $910 $860 $810 $760 $710 $660 $610 $560 $510 $460 $410 $360 $310 $260 $210 $160 $110 $60 $10 Gross Production Tax Oil Extraction Tax Fiscal Years 496.7

8 North Dakota Economy Booms, Population Soars North Dakota, the state with the nation's lowest unemployment rate, capped a decade of economic prosperity with dramatic population growth in its biggest cities. USA Today

9 Legacy Fund $1 Billion Schools $327 Million Water/Resources Projects $327 Million Strategic Investment & Improvement $400 Million State Disaster Relief Fund $22 Million Oil & Gas Research $4 Million Property Tax Relief $342 Million

10 North Dakota State Tax System Like a 3-Legged Stool (FY2012)* Collections (in Millions $) 1. Sales/Use Taxes = $1,139.8* 43.4% (State) 2. Income Taxes = $630.9* 24.0% (State) 3. Property Taxes = $ % (Local) * Preliminary 0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

11 Since 2007, $760 million in property tax relief has been approved by the legislature and Governor! $110 million for income tax credit based on property taxes paid $310 million for school district general fund mill levy buy down $342 million for school district general fund mill levy buy down

12 Homestead Tax Credit/Renters Refund Increased maximum qualifying income to $26,000 from $17,500 Increased maximum true and full value of the homestead to $100,000 from $75,000 Changed asset test, excluding first $100,000 unencumbered value of the homestead to $75,000 from $50,000 Maximum renter s property tax refund to $400 from $250 Disabled Veterans Credit Credit equal to the percentage of disability applied against the first $120,000 in true and full value.

13 Valuation/Assessment Modernization Updated assessment terminology New and expanded authority to the State Board of Equalization (SBOE) Enhanced record-keeping Certificate suspension & revocation Implementation of soil survey for agricultural land values Local Budget Transparency New notice requirements for cities, counties, schools, park districts increasing budgets and taxes.

14 Major Taxes as a Percent of Income Family of 3 - $50,000 per year Percent of income going to taxes 10% 8% 6% 4% 2% 0% 0.4% 1.5% 2.8% 1.0% Fargo 5.7% 0.6% 2.6% 2.4% 2.7% Billings 5.6% 0.7% 1.5% 5.1% Minneapolis 10% 0.4% 2.4% 2.4% Sioux Falls 5.2% 0.6% 2.2% 1.6% Cheyenne 4.4% 0.6% 0.5% 1.9% 4.4% 2.1% Omaha 9% 1.9% 3.9% 2.9% US Average 8.7% Income Property Sales Auto SOURCE: Tax Rates and Tax Burdens in the District of Columbia A Nationwide Comparison 2009, Government of the District of Columbia

15 Townships, 2.2% Misc. Districts, 1.6% State, 0.3% Counties, 29.9% Schools, 45.1% Cities, 20.9% Schools Cities Counties Misc. Districts Townships State

16 Schools Cities Counties Townships Misc Districts shift to shift to primarily oil/gas taxes Sales Income Oil/Gas Alcohol & Tobacco Lottery & Gaming Financial Institution Other State Resources

17 If property tax is abolished, the lost revenue would need to be replaced Sales tax rate would double Current rate New rate 5% 10%

18 If property tax is abolished, the lost revenue would need to be replaced Individual Income Tax rates would increase 279% over 2011 rates Across the board increases! 2011 rates New rates 1.51% 5.72% 2.82% 10.69% 3.13% 11.85% 3.63% 13.75% 3.99% 15.11%

19 If property tax is abolished, the lost revenue would need to be replaced Corporation Income Tax rates would increase 720% over 2011 rates 2011 rates New rates 1.68% 13.9% 4.23% 34.6% 5.15% 42.2%

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22 Property tax ban crushed at polls - InForum, June 12, 2012 Measure 2 rejected by voters - Bismarck Tribune, June 13, 2012 Measure 2 defeated, lawmakers mull property tax reforms - Grand Forks Herald, June 14, 2012

23 Measure 2 fails: North Dakotans vote to keep property taxes - The Dickinson Press, June 13, 2012 Measure 2 trounced; Measure 2 supporters plan to give voters second chance - Minot Daily News, June 13, 2012

24 Property Tax Relief Increasing State Funding of Local Education Broad-based Homestead Tax Credit Other Tax Relief Continue to Reduce Income Tax Rates Elimination

25 Property Tax Reform Elimination/Reduction of Property Tax Exemptions Caps Continue Modernizing Valuation Process

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27 or E Boulevard Ave, Dept. 127 Bismarck ND