Clock Ticking on Property Tax Fix

State lawmakers are not only wrestling with competing ideas on how to deliver property tax relief, but also are battling the clock as April 18 marked day 62 of the Nebraska Legislature’s 90-day session. That leaves a short, 28-day window for action on a tax relief measure, which, at the time of this writing, still requires the Legislature’s Revenue Committee to advance a bill, and then the full Legislature to advance what will most likely be a controversial tax relief measure through three rounds of floor debate. The governor has made it clear that any bill that generates new revenues to offset and replace property tax reductions will face a gubernatorial veto, ensuring that senators will have to rally 30 votes for an override, even if they successfully advance a bill.

“There’s time for the Legislature to deliver the meaningful property tax relief that rural and urban Nebraskans are seeking, but we’re rapidly moving to a critical juncture in the Revenue Committee hammering out a compromise and getting a bill to the floor,” said Bruce Rieker, Nebraska Farm Bureau vice-president of governmental relations.

The Legislature’s Revenue Committee has met several times in executive committee since early March to craft a tax relief package but has yet to reach agreement on a proposal. The committee is slated to hold a joint hearing with members of the Revenue, Education, and Retirement Systems Committees April 24 to get feedback on one proposal being discussed, but that measure has already drawn concern from rural senators on the Revenue Committee that it (LB 289) falls short of delivering adequate property tax relief for agriculture and rural Nebraska.

“We’re in a very fluid situation right now as the Revenue Committee examines different combinations of ideas that must answer how much property tax relief should be provided, how that relief would be delivered, and then, last but certainly not least, how to pay for that property tax relief,” said Rieker.

To this point, the Revenue Committee has discussed raising upward of $500 million for property tax relief, however, that amount has been in flux. In terms of how to deliver relief, the committee has generally discussed the idea of lowering property values and boosting state funding for K-12 education, the largest user of property taxes. Increasing the state’s sales tax rate, eliminating some state sales tax exemptions and increasing the cigarette tax have been at the center of the committee’s discussions on how to fund a property tax relief package.

Nebraska Farm Bureau’s message to the Revenue Committee and members of the Legislature on property taxes has been consistent from the start of the legislative session. According to Rieker, Farm Bureau’s and other agriculture organizations’ parameters of providing meaningful property tax relief involve:

1. Proving property tax relief for all property owners, including owners of residential property, commercial property and agricultural land.
2. Providing total property tax relief in the range of $600 million dollars per year, with $200 million per year being allocated for tax relief for owners of agricultural land.
3. Generating new revenue to offset property tax reductions.
4. Ensuring the $600 million in new property tax relief would be in addition to property tax relief currently provided through the state’s Property Tax Credit Fund.

“We’ve been pushing these parameters all session and continue to do so. It’s widely understood that if the state is going to lower property taxes in a meaningful way, i.e. in the range of $500 to $600 million, the Legislature will need to generate revenues to offset property tax reductions. That’s why the Legislature’s Revenue Committee and many other senators are open to discussing the adjustments to the state’s sales tax rate and looking at eliminating exemptions. That’s what it’s going to take,” said Rieker. “Nebraska Farm Bureau is supportive of those types of actions. Between the slowed agriculture economy and the damage from the recent storms, Nebraska agriculture needs property tax relief this session. It’s time to act, and we’re doing everything we can to get senators to do so.”