Nebraska lawmakers took what supporters described as a small step toward relieving the burden of school property taxes Wednesday.
The property tax bill changes several parts of the school aid formula. It does away with penalties for districts that don’t levy property taxes of at least 95 cents per $100 of valuation – that’s $950 a year on a $100,000 house. Education Committee Chairwoman Sen. Kate Sullivan said doing away with that requirement makes sense. "We have had clear evidence from school board minutes and media reports that some school districts do in fact keep their levies at a higher amount so that they will qualify for that additional aid. (This amendment) does not take away the state aid. It simply removes the excuse to levy at a certain amount to qualify for that aid," Sullivan said.
The bill also makes other adjustments to the formula, and restricts projects that school districts can borrow for without voter approval. To make up in state dollars, largely from sales and income taxes, for aid that districts would otherwise lose if the changes were not made, it would add an estimated $8.5 million to the nearly $1 billion state aid budget. Sen. David Schnoor said the proposal represented a modest change to the property tax system, which collected more than $3.5 billion last year. "We didn’t get this way overnight with the high property taxes. We’re not going to fix it in one fell swoop. And this is just, like I say, one small, incremental change," Schnoor said.
Sen. Mike Gloor used his favorite baseball analogy to put the proposal in perspective. "Resolving this problem requires as we have done in past years consistent changes, bunts and singles. And don’t get frustrated during this discussion and debate if somebody comes up with an amendment that swings for the fences that’s voted down," Gloor said.
Sen. Curt Friesen then offered just such an amendment. It would have increased state aid to schools starting at $500 per student, and increasing over time to $4,500. Friesen, a farmer, talked about how his property taxes have increased. "When I’ve been tracking four different pieces of ag land that I’ve owned for over 10 years, some of them for over 20 years, my property tax check that I write has gone up over 180 percent in those 10 years. That’s averaging 18 percent a year," Friesen said.
Sen. Roy Baker questioned Friesen about his proposal. "What do you see as the source of the money to fund the foundation (aid) to all schools on a per pupil basis?" he asked.
"Well, if you just want to be brutally truthful with people, it’s going to be some sort of sales tax, whether you look at broadening the base or raising the rate. With all the push to lower income taxes, I just don’t see that it’s going to go there," Friesen said.
That, combined with a cost Friesen estimated at hundreds of millions of dollars a year, was enough to make Baker consign the proposal to the theoretical realm. "I understand where you’re coming from and thanks for the conversation and I know obviously with that fiscal note that it’s not feasible, but (I) appreciate the conversation. Thank you," Baker said.
After some further discussion, Friesen withdrew his amendment. Senators then voted 38-0 to give the bill first round approval.
At a later news conference, Gov. Pete Ricketts praised senators for their action, but said more work remains to be done on property taxes. Another bill still pending would add $30 million for owners of agricultural property to an existing $204 million property tax credit fund.
Ricketts said his Revenue Department had estimated ag property taxes could rise 8 percent this year if nothing was done. Asked if it was enough to shave a couple of percentage points off that, Ricketts said "Certainly if you’re reducing the rate of growth, that’s property tax relief. And one of the messages I’ve been taking to folks is let’s not let the perfect become the enemy of the good."
The governor also announced he was signing this year’s budget bills without any line item vetoes.