Fire Districts Should Receive All Of the Fire Insurance Premium Tax as Outlined in Latest Audit

Last Friday, North Dakota Auditor Josh Gallion released the results of another audit to the press. The audit focused on the distribution of the fire insurance premium tax which is paid for by residents and administered by the Insurance Department. The suggested changes to the allocation of these dollars should be seriously considered by the Legislature to help fire districts across the state particularly in rural areas.

We have heard the struggles of maintaining essential services in rural North Dakota and offered solutions on NDx. In June, we highlighted the challenges for rural first responders and offered a potential incentive to recruit and retain volunteers. When it comes to additional funding for fire districts, the change offered in the audit is modest and is already being paid for by residents. The question, will the Legislature adopt the changes and live up to their campaign commentary of loving local control?

Here is a brief summary of how this premium is being paid and distributed as I understand it. The fire insurance premium tax is paid for by citizens through their premiums. In other words, we’re already paying it. The Insurance Department then distributes the fire insurance tax money back out to certified city fire districts, certified rural fire departments, or certified fire protection districts. It is done on an annual basis. That money can be used to update or improve fire equipment, training, buildings, and other services.

Here is the problem, the total amount of the premium money that can be allocated back to these fire districts each year is limited to an amount set by the state legislature. Anything paid in by residents over the arbitrary amount set by the Legislature goes into the state’s general fund that is then spent by lawmakers themselves. They’re skimming off the top for their own use. According to the press release that accompanied the audit, “The audit shows that over the last eight years, $13.4 million was put into the general fund rather than going back to the fire districts.” That needs to change.

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Meanwhile, these fire districts rely on property tax revenue as their main source of funding. People involved with these operations have indicated the legislature also puts limits on what they can do with property tax revenue further impacting their budgetary concerns to fully operate. Instead, these firefighters are often forced to host a raffle or a spaghetti feed to raise money for their department. Is this really how we should fund essential services in North Dakota?

The tensions between the Legislature and Auditor have been on public display since legislators snuck in a change to the auditor’s authority of performance audits at the last session. An Attorney General opinion said the Legislature likely overstepped their authority with the last second move. Their alleged frustration with Gallion was how he released the office’s work to the public.

I’d suggest that legislative frustration stems from certain legislators wanting to be in control of all aspects of the state from the information contained in a public audit, to the resources and authority of local governments. Yet, without the public being informed of the current distribution model revealed by this latest audit, how are they to know to seek a change in the policy? Now they know and it is up to them to seek a change from the Legislature if the public wants the money they’re already paying to be returned to their local districts.

Tyler Axness
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