LINCOLN — Frederic Oltjenbruns’ family had made a living tilling Nebraska’s soil for 150 years until last year.
That’s when he become a “refugee,” selling his Ceresco, Nebraska, farm and moving to Warrensburg, Missouri, to escape high property taxes.
He told a panel of state lawmakers on Wednesday that more farmers may be making the same move, given that his property tax bill fell from about $50,000 on 585 acres in Nebraska to $1,143 on his new 855-acre farm along the Blackwater River in Missouri.
“I hated to leave Nebraska, but they’ve created such a hostile (tax) environment for farmers and ranchers, I don’t think we had a choice,” said Oltjenbruns. “When the county makes more money off your farm (in taxes) than I did, it’s a problem.”
He was among several farmers who testified in favor of two measures introduced on behalf of Gov. Pete Ricketts to reduce property taxes in Nebraska.
One proposal, Legislative Bill 303, would increase the property tax credits issued to property owners from $224 million a year to at least $275 million a year. That represents nearly a doubling of the tax credit in five years.
The governor is also seeking passage of a proposed constitutional amendment, Legislative Resolution 8CA, which, if approved by voters, would cap increases in property tax revenue by school districts, cities, counties and other local taxing entities to no more than 3 percent a year.
Ricketts said that the property tax credit program, which began in 2007, has been the state’s sole conduit for providing property tax relief. While it is not the ultimate remedy for the state’s high property taxes, LB 303 would provide more direct property tax relief to farmers, ranchers and other property owners, he said.
“The idea here is to guarantee that property tax relief goes to our citizens,” Ricketts told the Legislature’s Revenue Committee. “It creates a lockbox around that $275 million against the tax-and-spenders.”
But opponents of the measure — including a think tank that Ricketts helped create — said that the additional tax credits did little to help farmers and homeowners and that larger, structural changes were needed in the state’s tax system and how the state funds K-12 education.
Sarah Curry of the Platte Institute, which Ricketts helped launch, said that the property tax credits provided only “temporary relief” and were actually a tax shift, from local property taxes to state income and sales taxes.
Renee Fry of the Open Sky Policy Institute, another think tank, said the owner of a Saunders County farm valued at $3.4 million would see only about $800 in additional credits under LB 303, and the owner of a $114,000 home in York would get only $23 more.
John Hansen of the Nebraska Farmers Union said the benefits of LB 303 aren’t nearly enough to defray exploding tax bills, though his organization welcomed any help. “This is the only real, live relief we’ve been getting,” he said.
State Sen. Lou Ann Linehan of Omaha, who introduced the proposed constitutional amendment on behalf of Ricketts, said it is needed because you can’t address high property taxes without controlling spending.
Figures provided by the State Revenue Department show that total property taxes collected in Nebraska have increased by 4.38 percent over the past 10 years. That has outpaced inflation, Linehan said, and the ability of taxpayers to keep up.
Ricketts said he is aware that there are “other solutions out there” for reducing property taxes, but he said a limit on government spending is a “fundamental piece” to the puzzle. Supporters of the proposal pointed out that the limit would apply only to property tax revenue, not state aid, sales taxes or other revenue sources, so local taxing entities would have some flexibility. Plus, they said, the 3 percent cap could be exceeded with voter approval.
But representatives of school districts, cities, natural resources districts, sanitary and improvement districts and natural resources districts lined up against LR 8CA, saying that a “one size fits all” revenue cap can’t work for all taxing entities. Many already face budget lids and tax levy restrictions, they said.
La Vista Mayor Doug Kindig, whose community is one of the fastest growing in the state, said a 3 percent cap would hinder growth, and might have prevented Sarpy County communities from providing the infrastructure to attract businesses like Cabelas, PayPal and the Nebraska Crossing Outlet Mall.
Representatives of several cities, including the City of Omaha, said they had little control over increases in costs like insurance and wages. Fry, of Open Sky, added that property tax revenue can vary widely, so that a cap might inspire entities to collect the maximum 3 percent every year to stay ahead.
