Screenshot Photo Gov. Kelly Armstrong delivers his address to the Legislature in Bismarck, Tuesday.

Capping local government spending and increasing the primary residence tax credit will give North Dakota homeowners true property tax relief, Gov. Kelly Armstrong said in delivering his state address at the opening session of the 2025 Legislature Tuesday.

“Providing real property tax relief and real reform must be number one on our agenda,” Armstrong said. “But it’s not the only thing on our agenda. With rapid growth also comes the need for mental health services and the challenges of overcrowded jails and prisons making our streets less safe and our citizens more vulnerable. We need solutions, both short term and long term. Regulations and bureaucratic growth that were necessary during a time of rapid economic expansion now run the risk of making us less competitive with other states for workforce and investment. Solving these challenges requires us to embrace new approaches, identify new solutions and, again, to try new things.”

Armstrong outlined measures the state has taken to ease property taxes, from buydowns to cost shifting to tax credits.

“To be honest, it hasn’t worked very well,” he said. It’s incredibly expensive, and people are as frustrated as they’ve ever been. And I know you all know this because there have been over 50 different bills introduced this session, but we cannot have paralysis by analysis. We need to act now to provide real property tax relief and real property tax reform. This is not an unsolvable problem.”

His proposal is a 3% cap on spending growth. If the entire 3% isn’t used, the remainder can be carried over for up to five years.

“This will encourage cities, counties, schools and park districts to budget prudently and plan ahead,” Armstrong said.

Armstrong also proposed an increase in the existing primary residence credit from $500 to $1,000 per year, at a cost to the general fund of $310 million. The relief would be automatic and not require homeowners to file for it. The plan would use a dedicated stream of Legacy Fund earnings to provide additional funds.

“This stream will grow as the fund grows, giving every North Dakota homeowner a direct stake in the overall success of the Legacy Fund. The total combined primary residence relief will be $1,550 per year for the next biennium, and at least $2,000 per year in the following biennium. Combined with the 3% cap, the Legislature will deliver significant relief that will grow exponentially faster than your property tax bill,” Armstrong said.

When Legacy Fund earnings stream grows to more than $2,000 per year, he added, every additional dollar will be split evenly between more property tax relief and decreasing the ongoing general fund expense of providing that 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 rate. As the Legacy Fund grows, it will eventually cover the entire cost of this plan,” Armstrong said.

Combined with the expanded Homestead Tax Credit, property taxes are eliminated with the $1,550 tax credit for that class of homeowners, while the bulk of homeowners will reach zero within the next decade, he said.

He urged legislators to make property tax relief the first bill to reach his desk.

“Because it will affect every other aspect of our budget. We can afford it. The people of North Dakota are demanding it. The plan is real relief and it is real reform. It is responsible. It’s achievable and it’s durable. It creates Legacy Fund buy in, and it is the single most impactful thing we can do for our citizens this legislative session. Let’s get it done,” he said.

Armstrong highlighted a number of other issues, including support for educational savings accounts to create parent choice in K-12 education, a law allowing for charter schools and $50 million for university challenge grants – or $20 million more than former Gov. Doug Burgum proposed.

Armstrong urged more investment in diversion at the front end of the justice system to cut the cost of prison. He proposed more funding for the addiction programs Free Through Recovery and Community Connect.

He announced the appointment of Jonathan Holth, most recently director of Recovery Reinvented, to a newly created Cabinet position as commissioner of Recovery and Re-entry.

On the energy front, Armstrong pushed for growing the state’s production, tapping into enhanced oil recovery and expanding pipeline infrastructure to bring more natural gas to market.

He encouraged support for value-added agriculture and expanding the Farm to School program that connects school lunch programs with local producers.

“The Legislature has invested in housing, daycare, workforce, attraction and retention. We must evaluate how those resources are being spent, figure out what is working and what isn’t, and streamline those programs and deploy them to communities, large and small, in a way that works for them. We need more solutions and fewer programs,” he said.

Armstrong also indicated a need for fewer boards and commissions. He said he signed an executive order Tuesday to dissolve five groups that have not met in more than a calendar year. He gave support to a bill that would create a task force to identify other boards and commissions to dissolve or combine.