Gov. Doug Burgum today expressed disappointment for the citizens of North Dakota after state Senate members rejected an income tax relief bill that would have saved taxpayers $46 million in tax year 2024 and effectively eliminated the state income tax for an additional 50,000 wage earners and small business owners filing as individuals.
Burgum called lawmakers to Bismarck for this week’s special session to address the 2023-2025 appropriations bill for the state Office of Management and Budget (OMB), as well as to make strategic investments in tax relief and infrastructure. The North Dakota Supreme Court issued an opinion Sept. 28 voiding the OMB bill, ruling it violated the state Constitution’s single-subject rule. Lawmakers passed 14 separate bills to address the OMB budget and other provisions in the voided bill.
“We’re grateful to Majority Leaders Hogue and Lefor for their collaboration to fix the OMB bill in an efficient manner and ensure that services to citizens and agency operations will continue without interruption,” Burgum said.
Despite the House overwhelmingly approving the income tax relief in House Bill 1549 on a 71-19 vote Tuesday, the Senate voted 16-31 to defeat the bill today.
“This is a missed opportunity. Senators could have followed the House’s lead and deliver much-needed tax relief to North Dakotans struggling with high inflation. Instead, they squandered that opportunity and ensured this special session will be remembered for spending taxpayer dollars to fix a legislative mistake,” Burgum said. “Rather than provide $46 million a year in income tax relief and eliminate state income tax for an additional 50,000 filers, they left town without sending so much as a penny of relief to taxpayers despite our overflowing coffers. Hardworking, taxpaying North Dakotans deserved better.”
Burgum urged lawmakers to pass income tax relief in his State of the State Address on Monday, The bill was introduced by Rep. Jared Hagert and co-sponsored by House Majority Leader Mike Lefor, Senate Majority Leader David Hogue, Reps. Craig Headland, Mike Motschenbacher and Jeremy Olson and Sens. Jordan Kannianen and Scott Meyer. The governor thanked the sponsors for bringing the bill forward.
In response to lawmakers’ concerns about potential economic downturns and being able to balance future budgets, Burgum noted the state has record reserve funds and wrapped up the 2021-23 biennium with a record-high general fund ending balance of $1.488 billion – $288 million more than what the Legislature thought was available in April. The projected ending fund balance for the current 2023-25 biennium is $417 million.
“This tax relief was a no-brainer: The citizens have the need, and we definitely have the resources. Current information shows our state’s financial position is stronger than ever,” Burgum said. “When state government collects more than it needs to operate and has overfilled its reserves, our first option should always be to return money to the taxpayers.”
For perspective, Burgum noted that the $46 million in proposed tax relief represented only 3% of the $1.488 billion June 30 ending fund balance, or less than 5% of the record-high $944 million balance in the rainy-day Budget Stabilization Fund, or less than 10% of the biennial earnings from the state’s nearly $10 billion-and-growing Legacy Fund.
Under the bill, the income thresholds for the bottom (zero percent) tax bracket would have increased from $44,725 to $60,000 for single filers and from $74,570 to $100,000 for married couples filing jointly. This would have saved single filers up to $298 per year and married couples filing jointly up to $492 per year on their state income tax.
The higher thresholds would have pulled about 50,000 North Dakotans into the zero tax bracket, effectively eliminating their state income tax. Single filers making more than $60,000 and married couples filing jointly making more than $100,000 also would have paid less state income tax by having a larger share of their income in the zero tax bracket.