North Dakota counties, including Divide and Traill, are grappling with a state-imposed 3% annual limit on local property tax increases, prompting two counties to ask voters to override the cap to maintain essential services, North Dakota Monitor reported. This legislative limit, enacted last year, creates funding challenges that could resonate in Burleigh and Morton counties as local governments statewide face rising operational costs and varied property valuation trends.
Divide County is seeking voter approval for an additional 2% increase, amounting to approximately $37,800 annually over the next four years, to support its general operations. Divide County Auditor/Treasurer Gayle Jastrzebski told North Dakota Monitor that the cap is difficult when faced with significant cost increases, citing a 10% rise in health insurance premiums last year. Divide County Commission Chairman Rodney Johnson told North Dakota Monitor that he believes the 3% cap is "unrealistic" and indicated that if voters do not approve the measure, the county would be forced to make budget cuts.
Similarly, Traill County is asking its voters for an additional 6.41%, which would generate roughly $461,000 annually for the next four years. This request aims to address increased costs for veterans services, health insurance, general cost of living adjustments, and various operating expenses, including roads, bridges, and technology. Traill County Auditor Heather Hovey told North Dakota Monitor that competition for employees is tough in her county, situated between Fargo and Grand Forks, and that the county is working to keep up with the local economy to retain staff. Hovey noted that the county might not use the full increase if approved, but a rejection could lead to staff reductions and delayed road projects. She also highlighted the difficulty of the Legislature imposing such a cap on local governments without applying a similar limit to state budgets.
The state Legislature, which passed the bill containing the 3% cap last year alongside expanded property tax credits for homeowners, currently shows little inclination to adjust the limit. Rep. Craig Headland, who chairs the House Finance and Taxation Committee, told North Dakota Monitor that he perceives no legislative support to alter or abolish the 3% cap. Headland, R-Montpelier, stated that counties in his area understand and abide by the limit, which lawmakers established using what they considered a good, average inflationary number. He suggested that one two-year budget cycle is insufficient to evaluate the claims of counties and that lawmakers would need to see true hardship to reconsider the cap.
The North Dakota Association of Counties (NDAC) is advocating for exceptions to the 3% cap, particularly for unavoidable costs such as health insurance, election administration, and jail expenses. Donnell Preskey, Government/Public Relations Specialist for the NDAC, told North Dakota Monitor that counties focus on providing necessary community services to address local needs. Preskey informed lawmakers this year that roughly two-thirds of North Dakota's 53 counties utilized financial reserves in the 2026 budget cycle, with 13 of those also maxing out the 3% increase. She emphasized that reserves are not a sustainable long-term solution. Preskey also noted that while property valuations might be increasing in larger cities like Bismarck and Fargo, they are declining in some other areas, resulting in less revenue for local budgets. She underscored this point to lawmakers in September, stressing the challenges faced by rural and more desolate parts of the state in maintaining population.
The impact of the 3% cap varies significantly across the state; for instance, it amounts to $18,000 for Slope County, with a population of 700, but $1.8 million for Cass County, home to over 200,000 people. Counties do have the option to bank any unused portion of the 3% cap for future use, an option about two-thirds of counties have exercised, according to an NDAC survey. However, the current ballot measures in Divide and Traill counties underscore the mounting pressure on local governments to secure adequate funding for operations amidst rising costs and a fixed state-mandated revenue ceiling.
