Property tax relief may be forced on Legislature
When 44th District Senator Dan Hughes was elected to the Legislature four years ago, he wanted to see the body come up with some form of property tax relief, especially for the ag sector. Four years later, he’s still pursing that goal.
When wheat hit $8 and corn $7 per bushel, farmers had never seen it so good in their lifetimes. Land prices skyrocketed in Chase County and throughout Nebraska and Iowa.
As valuations began to rise, nearly all local government entities took advantage of the increase, asking for more property taxes for their budgets.
They were quick to remind taxpayers their levy was less than the year before, which was true due to the higher valuations. But in reality, they were asking for more taxes than they had the year before. So much for austerity.
In land valuation assessment, value is determined on a three-year look back of market conditions. So as land prices rose, valuations began to climb as well. Then when the bottom dropped out of the commodity markets, the effects of the decline were felt by the ag economy immediately.
So despite lower commodity prices for their crops, farmers were still faced with the higher valuations and tax bills based on those valuations. That exacerbated an already growing property tax problem.
Since then, land values have come down significantly. But remember, it takes three years before those declines can be fully realized in valuations.
Sen. Hughes understands how adversely the ag economy of not only Chase County, but also the whole state, is affected by high property taxes shouldered by the ag sector. It’s not limited to farmers. Main street feels it as well.
During this year’s short session of the Legislature, at least three property tax relief bills were introduced. Only the governor’s tax plan got serious consideration but failed to move forward.
The Legislature has continued to reduce state aid to schools overall, with most of the state aid going to districts that don’t have the tax base that large rural districts have. They called it equalization.
Frankly, there’s nothing equal about it.
As a result, most schools in Hughes’ 44th district receive little or no state aid. That means a majority of their operating revenue comes from local property taxes.
The biggest share of state aid goes to urban districts. So with a Legislature dominated by urban senators, there’s no incentive for them to change the status quo—they’re doing quite fine the way it is.
Sen. Steve Erdman of Bayard introduced a bill that would refund 50 percent of the amount of local property taxes paid to support schools back to the respective taxpayers. It would force the state to refund about $1.1 billion.
Not surprisingly, Erdman’s bill never got out of Revenue Committee, a committee dominated by urban senators. I’m sure he suspected that would happen. That’s why a group called Reform for Nebraska’s Future started an initiative drive to put the same plan on the November ballot for voters to decide.
Odds are good the issue will get on the ballot. Right now, it’s probably a toss-up of whether it will pass. Lots of money will be thrown at it by metro chambers of commerce and the teachers union to defeat it. But if it does pass, the Legislature is going to have to strap its boots on and, like it or not, finally deal with property tax relief.