A Brief History: Property Taxes & Schools
This year’s legislative discussions on property tax reform have largely focused on property taxes used to fund schools. Schools in Nebraska levy over $2 billion in taxes each year, representing 60 percent of the total taxes collected statewide. However, farmers’ and ranchers’ school taxes typically represent 70-75 percent of their total tax bill because they do not pay city property taxes. The chart below illustrates the growth in general fund taxes levied by schools between school years 2006-07 and 2018-19. The figures are estimates calculated by Nebraska Farm Bureau based on general fund levy and valuation data from the Nebraska Department of Education and Nebraska Department of Revenue. The estimates do not include bond levies or special building fund levies. The blue and orange bars show the amount of taxes levied on agricultural land, residential property, all other property sectors combined, and total taxes in school years 2006-07 and 2018-19. The numbers above the bars show the percentage increases in taxes between the two school years
Total general fund property taxes levied by schools for school year 2018-19 exceeded $2.1 billion, 71 percent greater than the amount levied in school year 2006-07. Most of the school tax increases over the period was at the expense of agricultural land owners. School taxes levied on agricultural land increased 146 percent between the two school years, from $277 million to $680 million, while taxes on residential properties increased 44 percent, and those on all other property increased 60 percent. The proportional increase in taxes levied on agricultural property owners in 2018-19 represents a shift of $207 million in taxes in that school year alone.
Nebraska Farm Bureau also estimated the increases in school taxes levied between 2006-07 and 2018-19 according legislative district. To see these figures, click here. Because Douglas, Lancaster, and Sarpy Counties contain several legislative districts, the data is presented for each county and not legislative district. The figures represent the summation of school taxes levied for schools headquartered in the legislative district. Figures for schools that are headquartered in one legislative district and levy taxes on property in another legislative district are included in the legislative district in which they are headquartered.
Given the significance of taxes paid to schools in the overall property tax burden, it’s sensible for the Legislature to focus on the state’s role and obligation regarding school funding. Whether it’s through providing schools a per student foundation aid, a boost in special education funding, more TEEOSA aid, or assuring the state pays a minimum percentage of a school’s basic funding, look for any property tax package to contain a focus on school funding in this year’s Legislature.
