Pointed debate in Nebraska Legislature on 3% property tax funding cap

LINCOLN, Neb. - The property tax issue was taking center stage in the Nebraska Legislature, Thursday. LB 408 proposes limiting local governments to no more than a 3% increase in property tax request, excluding actual growth. Amendments to the bill propose a 3-year rolling average and a sunset provision to make the idea more acceptable.

Sponsor of the bill, Senator Tom Briese of Albion said he has tried to compromise on the issue.

"Folks, inflation has been moving along for the last ten years at about 1.75%, wage growth has been less than 2%, but property tax askings have been increasing at a rate roughly two to three times higher than that, at roughly 4.5%. I think it is unconscionable for us to allow that to happen."

Senators like Matt Williams of Gothenburg are growing weary of state officials telling all local governments they spend too much, citing several instances in his district where local entities have held spending below 2% annually.

"My concern with 408 is the premise of the bill. The premise of the bill, seems to be to me that it is to limit local spending, which has the premise that our local entities are spending too much. Those people that are watching the government of our local entities are elected by the same constituents that we are. What makes us smarter than them? I simply don't agree with this premise."

Senator Curt Friesen, of Henderson said the bill probably could be argued as government overreach by the state on a tax that is determined locally. But he said he’s concerned about growth in property taxes on homeowners.

"We either got to look at a different funding source or a different revenue source, so that property taxes and people are willing to move here...are not buying their house over, and over, and over again. I see this spike coming in our urban property taxes. I've talked about this for six years. This should be no one's surprise. This is what's coming. This is what happened to ag, ten years ago."

Senator Adam Morfeld of Omaha opposes LB 408, saying it is important to allow officials the tools to operate local government.

"This is the legislature eroding local control and the local ability for them to address the problems that their constituents told them were a priority. Now, if we want to talk about real substantive property tax relief, then we can talk about that. And, there's tons of ways that we can provide that without tying the hands of local governments who are doing their best give the circumstances we dictate to them and hand down to them. There's a ton of problems that I've seen over the last seven years, that we've created for local governments, where they are left holding the bag."

Senator Mike Flood of Norfolk says a huge rise in valuation has allowed local subdivisions to capitalize with revenue by using the same levy…laying blame specifically on community colleges.

"This legislature over the past ten years...we have an average around 3% growth per year in our spending, and we seem to meet the state's needs. Community colleges in the last ten years....19.36% in 2009, Central Community College....23.23% in 2010-2011....10.68% in 11-12....8.53%, 12-13....9.8%, 13-14....16.3%, 14-15....and then they started to level off. This is what happened, ladies and gentlemen under our own nose. These political taxing authorities rode the train for the last ten years and they have transferred hundreds of millions of dollars from property tax payers into the coffers of these political subdivisions, under the guise that they didn't raise anyone's taxes."

Senator Carol Blood of Bellevue challenged the role of state government in the property tax debate, which she says should be sound tax policy.

"I think we really need to put this in perspective. This is a blanket approach. We're going to take our time on the mic today. We're going to point out that you can't keep doing these kinds of bills that punish everybody, because you're perturbed, at a few."

Under LB 408, local bond debt would be excluded from the 3% property tax limitation.

NOTE: Mike Flood owns and operates News Channel Nebraska and its affiliates.