Regular review of state economic development tax incentives became state policy during the last legislative session and lawmakers are beginning their first foray into studying which incentives have worked and those that haven’t.
Sen. Dwight Cook, R-Mandan, said the state has more than 40 tax incentives on the books that were passed over the years, some have been used scarcely or not at all.
“We passed them and we then turned our backs on them and didn’t look at them,” he said.
Among incentives are those for agriculture and tax exemptions for energy production as well as new and expanding business exemptions.
SB2057 requires a study of each incentive, whether it’s duplicative or achieving the intended results. Study of the incentives is to be staggered so that once every six years each incentive on the books is reviewed.
The first review began over the summer by the interim Political Subdivision Taxation Committee. Prior to each new session, study results and recommendations for legislative bills relating to incentives are to be reported to Legislative Management.
Political Subdivision Taxation Committee Chairman Rep. Jason Dockter, R-Bismarck, agreed with Cook on the importance of giving the incentives a regular look.
“The whole purpose of this is to bring businesses and industry to the state (but) we have to be aware of the fact that for every economic incentive it takes away tax dollars,” Dockter said.
Dockter said the committee has received information on all credits and exemptions on the books and will pick eight to review before this next session. He gave no indication which incentives the committee may pick but that will be decided in the coming weeks.
Cook said the question that needs to be answered is what happens after the incentives are used. And North Dakota isn’t the only state questioning the incentives’ effectiveness.
“It’s like legislatures woke up across the country,” Cook said.
Cook said with taxpayer money being involved it’s important to find out which are bringing tangible results in terms of jobs, revenue and economic diversification.
“It’ll be a decision as to what as a state do we want to do. We’re going to decide whether we keep an incentive in place or repeal it,” Cook said.
–Nick Smith-Bismarck Tribune