Steve Nelson

A Path to Property Tax Relief

As I sit down to write this month’s column it’s just a couple days removed from Nebraska Farm Bureau’s Day at the Capitol on property taxes. I want to thank all of you who took the time to send letters, made calls, or took other steps to support Sen. Curt Friesen’s bill (LB 497) to change the way we fund schools and provide property tax relief.

I especially want to thank all of those who traveled to Lincoln and sat through a very long-day of hearings to relay that support directly to members of the Legislature’s Revenue Committee. Farm Bureau Day at the Capitol was a demonstration of true grassroots in action and I can’t tell you how much it is appreciated by myself, our volunteer leaders, and our staff.

In regard to Sen. Friesen’s bill, it is a definite step in the right direction to address inequities in how we fund schools and deliver property tax relief for all Nebraskans. (See a complete breakdown of the bill on page 6). However, it’s clear from testimony during the public hearing, that lots of work will need to be done before any school funding or property tax relief measure crosses the finish line.

Here are some things I hope those involved in this ongoing process will keep in mind:

If you don’t believe taxes on agricultural land are a problem, you only need to look at how Nebraska compares to its neighbors. According to new analysis done by our staff economist, Nebraska’s effective tax rate on agricultural land of 1.04 percent far exceeds that of bordering states. Nebraska’s effective tax rate exceeds Wyoming by more than 3 times and Iowa by 2.89 times. Kansas’ effective tax rate of .78 percent on agricultural land is nearest to Nebraska, but Nebraska’s rate is still 1.33 times greater. In short, Nebraska farmers and ranchers are paying very high property taxes and are clearly at a competitive disadvantage to farmers in neighboring states.

It is abundantly clear our state is too far down the path to “cut” our way to property tax relief. The state has shifted so much of the burden of funding education onto local property taxes the only way to correct this is by the state taking back some of that responsibility. For far too long the state has either failed to recognize the shifts that have taken place or has chosen to ignore the shifts because the increased burden has fallen on a minority of taxpayers. Broadening the state sources and generating necessary revenue to replace property taxes for school funding is the only way to “reset” the system.

Those opposed to expanding the tax base to address the property tax issue or oppose significant tax shifts must not ignore the fact that tax shifts have already happened to agricultural landowners. While total property tax collections statewide increased 57 percent over the last 10 years, taxes on agriculture land alone during that period increased 152 percent. If residential property taxes in Nebraska had increased 152 percent over the last 10 years, we wouldn’t just be talking about it, there would be rioting in the streets with people ready to tear down the State Capitol. That might be on the horizon as residential property is now beginning to see a tax shift of its own. NOW is the time to fix the problem by broadening our tax base to get our school funding and property tax house in order. We can’t kick this can down the road any longer. Anything less than meaningful action this session can only be viewed as a failure on the part of our elected leaders, as they are the only ones who can actually vote to provide property tax relief.

We need to work together, rural and urban Nebraska! Sometimes that collective effort comes through a cooperative spirit. Other times, it comes through necessity. Either way, that is the only way for big things to get done in our state. There is a path forward to improve the way we fund schools, provide property tax relief, and address other issues of interest. It’s time we work together!

Until Next Time,

Steve Nelson