Monday, July 09, 2012
Standard Article by NDPC
Issue: Economic Development
Bismarck- On Friday, the North Dakota Supreme Court released their decision regarding the North Dakota Policy Council's lawsuit challenging how the City of Bismarck uses tax increment financing in Haugland v. City of Bismarck, adding another layer to the political battle to end tax increment financing and the government's practice of giving tax-dollars away to private interests.
In an unprecedented expansion of the state's power, the court ruled that Article X, Section 18 of the North Dakota Constitution does not limit the state's or its political subdivisions' ability to give money away to purely private interests, seemingly ignoring the plain reading and purpose of the clause.
"The framers of the Constitution included the provision to limit the state's actions," said Curly Haugland, the plaintiff in the case. "The court has eroded the protections that the framers put in place for taxpayers, gutting the entire clause to the point where it does not stop the government from doing anything."
Despite the court's ruling on the constitutional issues, it also said that cities must have a specific purpose for TIF money before collecting it and that it cannot simply accumulate money and seek out projects at a later date. This decision will mean that the City of Bismarck may not be able to use already accumulated money for projects, such as quiet rail and a parking ramp that had been in the works.
"In addition to the court ruling that Bismarck may not have acted within the law, we have won important political victories by filing the suit," said NDPC Executive Director Brett Narloch. "In 2011, the state legislature significantly reformed TIF laws and we were successful in getting the City of Bismarck to return nearly $9 million from the tax increment fund back for their intended uses, such as schools and roads."
Haugland added, "Despite the narrow victories on the statutory matters, the fact that the constitution has been rendered meaningless is significant. The only way to limit government - as it was intended to be - will be to amend the constitution with an initiated measure."
To read the court's opinion, click HERE.
The North Dakota Policy Council is a 501c3 non-profit, non-partisan organization.