North Dakota bond issuers only have a couple more weeks to push any general obligation bond deals through before the first of the year. As of January 1, 2012 GOs will be on hold until voters decide whether they want to abolish property taxes during the June election. The North Dakota Public Finance Authority will not allow political subdivisions to issue GO bonds after December 31, 2011 until after the election results are known.
Entities that were planning to issue a GO bond to pay for projects such as building new schools near the booming oil fields or flood disaster recovery will likely be affected the most. However, revenue bonds may still be used to help pay for projects during the six month moratorium.
If Measure 2 is approved, North Dakota will be the first state in the nation to do away with property taxes. Lawmakers would be forced to stretch state tax revenues to replace an estimated $800 million in yearly property tax income. Additional resources may have to be tapped in order to make up the difference. For instance, the money may have to come from the state’s tobacco sales taxes, individual or corporate taxes, state sales taxes, oil production or extraction taxes and lottery revenue. Although these additional revenue sources may be abundant today, they may not be able to be accurately projected from year to year.
Voters will go to the polls on June 12. If it passes, Measure 2 would be retroactively effective as of January 1.