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The Associated Press March 23, 2012, 10:10AM ET

Hearing planned on ND property tax lawsuit

A judge scheduled an April 3 hearing on a lawsuit that accuses North Dakota Tax Commissioner Cory Fong and other officials of illegally using public funds to fight a constitutional amendment that would abolish property taxes.

The proposal will be listed as Measure 2 on the June 12 primary ballot. In an order, South Central District Judge Bruce Romanick said he decided to move up earlier hearings scheduled in the lawsuit because of "the substance of this matter impacting the election."

The amendment's backers want Romanick to order the officials and organizations named in the lawsuit to stop their public opposition. Its foes want the lawsuit dismissed, saying it is intended to "manipulate the political process."

Both sides agree a speedy hearing is needed.

"The mere pendency of this litigation creates a chilling effect on state defendants' speech," Attorney General Wayne Stenehjem said in a court filing. "It also stifles the speech of other public officials who remain silent on these issues for fear of being named in a lawsuit."

Lynn Boughey, an attorney for the measure's supporters, said they only want to enforce a state law that bars public officials from taking a position on voter initiatives, and prohibits them from spending taxpayer money for advocacy.

The law "was passed with the specific purpose of preventing public officials from using public funds or their public position to taint the initiative ... process by advocating, or presenting, false or misleading information," Boughey said.

Local governments rely on property taxes to finance their operations. The amendment says the Legislature would be required to make up the losses, which the state Tax Department estimates could exceed $850 million this year alone.

Opponents of the measure say the Legislature may have to raise state income and sales taxes to provide replacement revenue, a belief the amendment's backers dispute. Officials say they also wonder about how new local projects will be financed.

The lawsuit's defendants are Fong; state Sens. Dwight Cook, R-Mandan, and Dave Oehlke, R-Devils Lake; Reps. Charles Damschen, R-Hampden, and Lonny Winrich, D-Grand Forks; Divide County Commissioner Doug Graupe; Cass County Commissioner Scott Wagner; Darcie Huwe, the city of Wahpeton's finance director; Williams County Auditor Beth Innis; and state associations that represent school boards, cities, counties and weed control boards.

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