Property tax bill calls for massive shift in taxes off ag land and onto sales taxes

Property tax bill calls for massive shift in taxes off ag land and onto sales taxes
World-Herald News Service

LINCOLN — A coalition of farmers rolled out its plan to reduce property taxes on farmers on Tuesday, arguing that increasing sales taxes is the best course for solving the state’s most vexing tax problem: high property taxes.

Detractors say the plan, released by a group called Fair Nebraska, is too weighted to benefit farmers. Perhaps as a result, no senator was willing to introduce it in the Nebraska Legislature this year — a year in which addressing high property taxes is a high priority.

But Fair Nebraska members say that dramatic changes are needed for the state’s No. 1 industry, agriculture.

“We’re not only not competitive with other states, we’re not competitive with our neighboring school districts,” said York farmer Doug Nienhueser, one of the leaders of the group.

The Fair Nebraska plan calls for raising sales taxes by three-quarters of a cent, ending the sales tax exemption on groceries and redirecting the current state property tax credits, among other things, to dramatically increase state support for K-12 schools, which would allow farm and ranch land to be totally exempt from property taxes for local education.

Farmers and ranchers would continue to pay property taxes on their homes and buildings under the plan, which assumes that they would increase spending and investment, boosting sales and income taxes by almost $43 million.

It would cause nearly a $1 billion tax shift by 2023, the organization estimated, with higher taxes being paid in the state’s largest counties.

Nienhueser disputed that the plan benefited only farmers and said that even though no senator would introduce their plan, it was important to educate state senators about the big increase in property tax bills. The group’s luncheon on Tuesday was attended by about a dozen state senators. It also served to unveil a study, commissioned by Fair Nebraska, about the state’s property tax problems that was done by Creighton University economist Ernie Goss.

State Sen. Lou Ann Linehan of Elkhorn, who chairs the Legislature’s Revenue Committee, said she sympathizes with farmers, but could not support their plan. She said she supported some portions of the proposal and was particularly interested in information provided by Goss that said total state and local support for K-12 schools was about $363 million a year more than the median provided in neighboring states.

Linehan, who will guide the crafting of a property tax relief proposals this year, said that any solution needs to include provisions to rein in school spending.

“Why are we spending more on students than other states around us? It’s a question we have to ask,” the senator said.

Among the highlights of Goss’ report:

  • High property taxes have created “soaring financial stress” for Nebraska farmers and ranchers, who have seen a 45 percent decrease in earnings from 2013 through 2017 while absorbing a 34 percent increase in property taxes. That makes it harder for Nebraska’s farmers to compete, he said.
  • About 33 percent of funding for K-12 education in Nebraska comes from state sources, the second-lowest among adjacent states (South Dakota is lower). If Fair Nebraska’s plan was implemented, state sources would fund 59 percent of that cost, thus lowering the pressure on local property taxes.
  • Nebraska’s property taxes are the highest among its neighboring states, with the exception of Wyoming. By contrast, state sales taxes in Nebraska, as measured as a percentage of the gross domestic product, are the lowest compared with the six adjacent states. Increasing the state sales tax to 6.25 cents and doing away with the exemption on groceries would generate about $460 million in new revenue a year by 2023, which would be used as increased state aid to offset lower property taxes.
  • Adjusting the state aid formula for K-12 education is a big part of the solution, Goss said. Three of the state’s largest school districts got 40 percent of the total state aid in 2016, while 200 of the state’s school districts get less than 1 percent. By contrast, Iowa’s three largest school districts get about 16 percent of all state aid there. (The latest figures from the Nebraska Department of Education indicate that Nebraska’s three largest districts, Omaha, Lincoln and Millard, educate about 37 percent of the state’s students.)

Bill on early childhood education fails in Nebraska Legislature

» Early childhood. Nebraska lawmakers killed a bill Monday that would have required cities and towns to consider early childhood education needs when developing comprehensive plans. Legislative Bill 66 fell six short of the number needed to advance, with 23 senators voting against the bill, 19 voting for it and six abstaining.

State Sen. Matt Hansen of Lincoln introduced the measure as a way to ensure that parents’ needs for child care are taken into account.

Lawmakers passed a similar requirement last year as part of a legislative package. Gov. Pete Ricketts vetoed the legislation because he objected to another part of the package.

» Unemployment insurance. For the sixth straight year, state unemployment taxes on Nebraska businesses will be lower.

In a telephone call with reporters, Ricketts said employers in Nebraska will pay about $4.3 million less in unemployment insurance in 2019, which meets his goal of delivering tax relief.

Ricketts said the “re-employment” program he launched with the State Department of Labor two years ago has allowed Nebraska to reduce its rates more than other states by getting unemployed workers back into jobs more quickly. He acknowledged that the improved economy has also been a factor.

The state’s unemployment insurance trust fund hit bottom in 2010 at $124 million in the wake of the recession but has been on the rebound since then, in part thanks to $43 million in federal stimulus funds. The fund now holds about $500 million.

» Stothert v. Ricketts. The governor on Monday said he disagrees with Omaha Mayor Jean Stothert’s criticism of his proposed constitutional amendment to limit increases in property tax revenue to less than 3 percent a year as “detrimental” to the city, particularly when it annexes new subdivisions.

The budgets of any sanitary improvement districts annexed by Omaha, Ricketts told reporters, would be included in calculating the city’s 3 percent revenue growth cap.

He added that the cap does not apply to other revenue sources for the city, such as sales and restaurant taxes, and that if Omaha really needed more revenue, city voters could vote to exceed the cap.

“There are a number of things that address the concerns of local governments,” Ricketts said.

Proposed license plates would highlight U.S. troops, sandhill cranes, cancer awareness and more

LINCOLN — A wave of alternative Nebraska license plates may be on the way.

Want to highlight your affection for sandhill cranes or turtles? Advance the causes of neutering pets or checking for prostate cancer? Honor veterans or support the troops?

On Tuesday, the Legislature’s Transportation and Telecommunications Committee heard about all those license plate ideas and more — including a proposal to limit the state to just one license plate.

New Nebraska plates now pop up often, because organizations can have a specialty plate created with 250 applications and DMV approval. People who want the plates pay an extra fee.

State Sen. Robert Hilkemann of Omaha has introduced LB 38, which would require just one license plate on a vehicle, as is the case in 19 states. It drew opposition from the Omaha Police Department, which argued that a single plate makes it more difficult to identify cars.

But most of the license plate bills this year are looking to expand Nebraska’s lineup of specialty plates:

Sandhill cranes, bighorn sheep and cutthroat trout For wildlife conservation, up to three license plates would feature cranes, sheep and trout, under LB 128, introduced by Sen. Dan Hughes of Venango.

Three-quarters of the $40 fee would go to the Nebraska Game and Parks Commission’s Educational Fund. Some proponents said the money would be better put to its Wildlife Conservation Fund.

There was debate from proponents on the best animals to be featured the plates. Testifiers from the Nebraska Wildlife Federation and the Sierra Club said the cutthroat trout is not native to Nebraska, but the Nebraska Game and Parks Commission disagreed.

Spay and neuter your pets Presumably, this one would have extremely cute dogs and cats on it.

“LB 546 is for all of our four-legged constituents,” said Lincoln Sen. Anna Wishart, who introduced the bill.

Funds raised would go toward a new low-income spay and neuter program.

Ornate box turtle

Sen. Machaela Cavanaugh, who said she has the immensely popular mountain lion conservation plate, would like to see more animal plates, “furry and otherwise.”

LB 691 would send funds to the Wildlife Conservation Fund under an amendment to the introduced version of the bill, which would create a new fund for turtles.

Prostate cancer awareness

LB 215 was suggested to Omaha Sen. Lou Ann Linehan by a constituent.

“There are usually no symptoms of early stage prostate cancer,” Linehan said, “which makes it extremely important that men talk to their doctors about prostate cancer after reaching the age of 40.”

Nebraska currently has breast cancer awareness plates.

Military honor

Sen. Carol Blood is proposing six new plates in LB 138.

Four plates would be for veterans of Iraq, Afghanistan, the Persian Gulf War and Vietnam. Blood also said an amendment to the bill would add a fifth plate for veterans of the global war on terror. The funds from those plates would go to the Nebraska Veteran Cemetery System Operation Fund.

She also proposes a “support our troops” plate. Funds from that plate would go to a new fund for a veteran employment program.

In other license plate legislation, fees for military plates would be eliminated under LB 697 from Brainard Sen. Bruce Bostelman.

And LB 356 from Speaker Jim Scheer of Norfolk would change the way funds are distributed from Sammy’s Superheroes license plates. The Columbus nonprofit raises money and awareness for childhood cancer, but the plates bearing the organization’s name currently generate funding for roads.

Scheer’s bill would change that, directing 85 percent of the money raised from the plates to the University of Nebraska Medical Center.

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