Gov. Kelly Armstrong today delivered his 2025 State of the State Address to a joint session of the 69th Legislative Assembly, outlining a property tax relief and reform plan that would put the majority of primary residences on a path to zero property taxes within the next decade.
Addressing the full Legislature for the first time since he and Lt. Gov. Michelle Strinden took office on Dec. 15, Armstrong thanked lawmakers for their collaboration in crafting the property tax plan and urged them to make it the first piece of legislation sent to his desk.
“We can afford it. The people of North Dakota are demanding it. This plan is real relief and it is real reform,” Armstrong said. “It’s responsible, achievable and durable. It creates Legacy Fund buy-in. And it is the single most impactful thing we can do for the citizens of North Dakota this session.”
The tax relief portion of the plan is twofold:
- It will increase the existing Primary Residence Credit from $500 to $1,000 per year at a cost to the state’s general fund of about $310 million for the 2025-27 biennium.
- It will use a dedicated stream of Legacy Fund earnings – $173 million next biennium – to provide additional funds to the primary residence credit, initially $550 per residence.
The total combined primary residence relief will be $1,550 per year in the 2025-27 biennium and at least $2,000 dollars per year in the 2027-29 biennium.
“Homeowners will see a significant, immediate impact. Combined with the expanded Homestead Tax Credit, the initial $1,550 will eliminate property taxes for an entire class of homeowners who need it the most. And it will put the bulk of primary residences on a path to zero within the next decade,” Armstrong said. “Our workforce recruitment efforts will benefit. Thanks to the historic income tax relief you all passed last session, combined with our pro-business environment and high quality of life, our low property taxes will make North Dakota an even better place to live, work and raise a family.”
The plan provides reform by capping future increases in local property tax budgets at 3% per year. If the entire 3% increase isn’t used, the remainder of it can be carried forward for up to five years. This will encourage cities, counties, schools and park districts to budget prudently and plan ahead, the governor said.
Armstrong noted that the legacy earnings stream will grow as the Legacy Fund grows, giving every North Dakota homeowner a direct stake in the overall success of the Legacy Fund. When the legacy stream grows enough to support a credit of more than $2,000 per year, every additional dollar will be split evenly between more property tax relief and decreasing the ongoing general fund expense of providing the relief.
“This will eventually lower the general fund’s ongoing cost to zero, ensuring we don’t saddle future legislatures with having to fund this tax relief. As the Legacy Fund grows, it will eventually cover the entire cost of this plan,” Armstrong said.
Armstrong thanked House Majority Leader Mike Lefor and Senate Majority Leader David Hogue for facilitating conversations with legislators in crafting the plan.
“Recognizing the frustration of our constituents and using the expertise and background of our legislators, we are offering the most aggressive, durable and responsible plan to reduce property taxes that has ever been proposed,” Armstrong said. “While the different elements are familiar, the overall framework is unique, because in order to solve an old problem, we need to try new things.”
Armstrong also addressed other challenges facing the state, including behavioral health and addiction. The governor announced the creation of a new Cabinet position, Commissioner of Recovery and Re-entry. To fill the position, he announced the appointment of Jonathan Holth, who had served as managing director of Recovery Reinvented under the administration of former Gov. Doug Burgum and First Lady Kathryn Burgum.
“The goal of this position will be to operationalize the relationships between the DOCR, county jails, law enforcement, the judicial system, our tribal partners, addiction counselors, and everybody else who cares about providing services to the people in our communities who need them the most,” Armstrong said.
The governor called for short- and long-term solutions to jail and prison overcrowding, including a turnkey solution that will be presented to appropriators in his executive budget address next week. The budget also will include robust funding for the Free Through Recovery and Community Connect programs.
Armstrong called for policy that encourages value-added agriculture projects and allows oil and gas companies to crack the code on enhanced oil recovery and unlock the vast untapped oil reserves in the Bakken shale formation. He also emphasized the need to work with industry to build out pipeline infrastructure to move natural gas out of the Bakken and allow additional growth in oil production.
Making government services more efficient and user-friendly will be a focus of the administration, Armstrong said, voicing support for proposed legislation that will create a task force to review the state’s more than 150 boards and commissions and recommend which ones can be dissolved or combined and which are essential to the core functions of government. To kickstart the effort, Armstrong announced he signed an executive order dissolving five groups that hadn’t met in over a calendar year.
To better engage students, expand educational opportunities and empower parents, Armstrong said his budget will support Education Savings Accounts and allow for the creation of public charter schools.
“With Lt. Gov. Strinden’s leadership and our legislative partners, we can ensure every parent has the freedom and flexibility to choose the right educational plan for their child,” Armstrong said, also proposing to increase state funding to $50 million for higher education challenge grants, which support student scholarships and are matched 2-to-1 by private dollars.
Armstrong called for continued collaboration with the five tribal nations in North Dakota, stating, “Their challenges are our challenges. Their successes are our successes.”
He said the state can provide property tax relief and reform, address mental health challenges, work on solutions to workforce, child care and housing, continue to support law enforcement, firefighters and first responders, and continue to build on policy that makes North Dakota the most military-friendly state in the nation.
“North Dakota is not broken. It does not need fixing. We are home to the best people on Earth. The State of the State is as resilient as its people,” he said. “As we navigate the next four months and the next four years, our sole focus should be to make their lives easier – to promote policies that make North Dakota the best place to live, work and raise a family.”
A copy of the prepared address is available here.