Yesterday, the voters of the two largest counties in North Dakota sent a clear and loud message to local officials - "No New Taxes." Taxpayers in two major cities also declared that sales taxes they approved for previous projects should not be rolled over into new projects.

Voters want the chance to vote on tax issues. The voters of Cass and Grand Forks counties have now declared - taxes are high enough, thank you.

Cass County Voters Defeat Sales Tax Increase

Cass County voters Tuesday defeated a proposed half-cent sales tax increase. The tax increase was being sold as a way to fund economic development efforts in the county. The voters overwhelmingly defeated the idea of taking money out of the economy in the name of economic development by a 2-to-1 margin (63% No, 37% Yes).

Congress's Unintended Consequences Strike Again

Did N.D. delegation know it was levying a hidden tax on students and making it harder to get student loans?

Last October, the U.S. Congress including Sen. Byron Dorgan, Sen. Kent Conrad, and Rep. Pomeroy voted in favor of H.R. 2669 ("The College Cost Reduction and Access Act.) The purpose of HR 2669 was to reduce the cost of college loans and make those loans easier to obtain.

Unfortunately, like many efforts to score cheap political points, the unintended consequences of this legislation may result in a shortage of student loans. Under the new rules of H.R. 2669, the margin of profit for lenders to participate in the student loan program was cut in half.

By reducing the incentive to offer student loans, Congress has actually found a way to make it harder to get student loans. North Dakota's federal delegation had an obligation to listen to what the Bank of North Dakota was advising them to do, and choose partisan politics over good economic policy.

Last month, the Bank of North Dakota (BND) announced that it will suspend its student loan consolidation program as of June 1st. Julie Kubisiak, director of Student Loans at BND, has been quoted in media reports as saying the student loan consolidation program is "no longer economically feasible" due to new federal law.

Instead of scoring cheap political points, the delegation should have done its homework to find out how the legislation would affect North Dakota students and graduates. Now the very real possibility exists that students will end up paying more interest after this so-called reform was passed than they would have under the old system.

Americans for Prosperity of North Dakota contacted the Bank of North Dakota on this issue. It was explained by a high ranking official at the bank that the new rules for lenders have priced 1/3^rd of banks national out of the consolidation loan program, and that consolidation loans will be a thing of the past soon. The same official said that approximately 3% of the interest a student currently pays is diverted to financing the federal budget deficit.

Congress has now created a hidden 3% tax on students as a way to reduce the federal budget deficit. This 3% tax on student loans won't do much to balance the budget, but it will certainly reduce the discretionary incomes of college graduates.

The Project on Student Debt reported that as of 2005 North Dakota has the 3^rd highest average student debt in the nation.