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North Dakota tax rebate pitch now 'stimulus'

BISMARCK - A bill that would return $100 million in state funds to North Dakotans this year as a tax rebate is being backed as an economic stimulus bill.

House Bill 1324 was introduced at the beginning of the Legislature as a way to return part of the state's $1 billion surplus to people because the state has "far more than we need," according to its prime sponsor, Rep. Rick Berg, R-Fargo.

But supporters at Wednesday's hearing before the Senate Finance and Tax Committee also referred to the hundreds of recent employee layoffs at North Dakota companies and other ominous economic news, and said the money needs to go back to the taxpayers so they can infuse it into the economy.

"The more of the surplus that can be back-injected into the economy, the less local governments will have to increase property taxes because of sales tax shortfalls and a glut in the housing market," said North Dakota Taxpayers' Association lobbyist Dustin Gawrylow.

He said the Minneapolis Federal Reserve predicted that North Dakota's personal income will decline 15.4 percent this year because of the recession.

"If the Legislature chooses to sit on this surplus and not put it to work in the economy, it is doing the exact same thing (as) banks who took government bailout money and are not lending it out," Gawrylow said.

Wayne Papke, a Bismarck financial adviser, went even further in backing the bill.

"I have a much more doom-and-gloom attitude," he testified. "We need to create our own self-economy stimulus package."

But one legislator questioned whether a rebate is the best thing.

"I just can't help but think of a bald-headed governor in an adjacent state who insisted on rebates," said Sen. Dave Oehlke, R-Devils Lake. He noted that a few years after Minnesota Gov. Jesse Ventura championed state tax rebates in his state, its government was struggling to find enough revenue.

The bill also proposes a permanent decrease in the state income tax rates starting in 2011.

The committee took no action.