GOVERNOR JACK DALRYMPLES TAX RELIEF INITIATIVE $545 Million in Comprehensive Property and Income Tax Relief

August 13, 2012

Progress to Date Governor Jack Dalrymple has a proven record of making tax relief a priority for the people of North Dakota. As governor and lieutenant governor, Dalrymples leadership and prudent fiscal management have served him well in working with legislators and taxpayers to provide broad-based tax relief for the past four years. During the 2009 Legislative Session, the state passed $400 million in tax reductions. The package included: $295 million in property tax relief for homeowners, farmers, ranchers and commercial businesses. $90 million in individual income tax relief. $10 million in corporate tax reductions. An increase in the Homestead Tax Credit of nearly $5 million over two years to help reduce the burden of taxes on seniors and people with disabilities. In 2011, Gov. Dalrymple proposed and the Legislature approved an historic tax relief package of nearly $500 million. The package provided $342 million in property tax relief and an additional $147 million in income tax relief during the 2011-2013 biennium. The tax relief package was made up of: $342 million in property tax relief for homeowners, farmers, ranchers and commercial businesses during the 2011-2013 biennium. $120 million in individual income tax relief across all tax brackets. Combined with action taken during the 2009 session, North Dakotans are currently receiving a 30.2 percent reduction in their income tax. A reduction in corporate income taxes of 19.5 percent for a total of $25 million to retain businesses, to attract new businesses and to help further stimulate North Dakotas economy. Since 2009, Dalrymple has worked to pass tax relief that has saved individuals, families, farmers, ranchers and businesses $1 billion. The long-held view to use the states economic prosperity to provide tax relief has been an integral part of Governor Dalrymples leadership. Continuing to reduce taxes is a primary focus for Dalrymple as he works to create a brighter future for North Dakota.

Governor Dalrymples Tax Reduction Plan North Dakota is in a sound financial condition and the long-term outlook for the state is continued growth and prosperity. As a result, Governor Jack Dalrymple will propose in his upcoming budget recommendations a statewide reduction in property taxes, a reduction in individual and corporate income taxes, and enhancement of the Homestead Tax Credit. The largest and most significant tax cut will be a reduction in school property tax of 50 percent for a school district with an average tax levy. The statewide average education mill levy for school districts is approximately 120 mills. Governor Dalrymple will propose that the state create an incentive for the school district to reduce its property tax levy. This means a homeowner in an average school district whose home value is $180,000 will now see a total reduction in property taxes of $1,070 per year, compared to the average reduction of $595 today. For the 2013-15 biennium the new reduction in school taxes is expected to save North Dakota property tax payers an additional $400 million, for a total of $850 million in savings for the coming biennium. To qualify for tax relief, a school district must reduce its property tax collections an amount equal to the amount of state support, unchanged from the current procedure. This ensures the school district will receive the full amount of funding they would have otherwise received, while still reducing the burden on local property tax payers. With this proposal, Governor Dalrymple is reaffirming his commitment to permanent property tax relief for the local taxpayer by reducing the local share of the cost of K12 education. This tax relief will be sustainable over the long-term because of the states stable economy and prudent fiscal management. Governor Dalrymple will continue working with legislators and education leaders to fully integrate the states total share of funding into the regular school funding formula on a permanent basis. Any formula revision will be equitable among all school districts and will not include reliance on historic tax levies. Governor Dalrymple will also propose a substantial expansion in the Homestead Tax Credit to provide more tax relief to senior citizens and the disabled. Currently people over age 65 and disabled citizens may apply to the state tax commissioner to have all

or a portion of their property taxes paid on their behalf by the state. Governor Dalrymple will propose to increase the tax relief for seniors by making more people eligible by eliminating the penalty on those who have saved assets for retirement and by increasing the income threshold for a household to $50,000 per year. Tax relief will also be increased by disregarding social security benefits in the calculation of the income test. These changes are estimated to save qualifying property tax payers an additional $20 million in property taxes per biennium on top of the $850 million in regular property tax relief provided to all taxpayers. This will go a long way toward helping senior citizens and the disabled remain in their homes. In addition to cutting school property taxes by 50 percent in an average district, Governor Dalrymple will propose a reduction in individual income taxes, saving taxpayers $100 million in the upcoming biennium. This proposal, combined with tax reductions since 2009, reduces income taxes by nearly 40 percent. Further, Governor Dalrymple will propose a reduction in corporate income taxes that will save businesses $25 million. This will enhance North Dakotas business-friendly climate and create even more career opportunities in one of the strongest state economies in the nation. Altogether, this plan for tax reductions will save North Dakota taxpayers an additional $545 million over the coming biennium. Combined with previous tax reductions in 2009 and 2011, North Dakota taxpayers by the end of the coming biennium will have paid $2.25 billion less in taxes than they would have paid without the changes made during the Dalrymple years.