LINCOLN, NEB. – A legislative proposal to make fundamental changes in the way Nebraska funds K-12 schools and in the process deliver an estimated $500 million in property tax relief has earned the support of several Nebraska agriculture organizations. The groups announced their support leading into first round legislative debate on LB 289, a bill advanced by the Legislature’s Revenue Committee.
“LB 289 provides much needed fundamental reforms to help break the cycle of overreliance on property taxes for funding K-12 education,” said Steve Nelson, Nebraska Farm Bureau president. “This is no property tax band-aid. We’re talking about major tax and education funding reform, the likes of which we have not seen from the Legislature in a long, long time.”
The groups’ support for the bill is founded in the fact it addresses two major issues, specifically the state’s overreliance on property taxes for funding K-12 education and the state’s failure to provide funding to help cover education costs for all K-12 students.
“Today the state picks up the majority education funding costs for students in some school districts, while doing little to nothing to help cover the costs of education for others. The state clearly has a responsibility to help all our students no matter where they live, or the school they attend. LB 289 would help achieve that,” said Robert Johnston, Nebraska Soybean Association president.
LB 289 would address student funding inequities by establishing per-student Foundation aid for every school in the state. In addition, the bill would establish a minimum aid guarantee to ensure one-third of an individual school’s needs are covered by the state.
The bill tackles the overreliance on property taxes to fund schools by replacing those dollars with new sources of revenue, including elimination of numerous service-based sales tax exemptions, increasing state’s sales tax rate, increasing cigarette taxes, and eliminating the state’s personal property tax exemption among other items.
“Nebraska’s three-legged tax stool of property, sales, and income taxes has long been out of balance with property taxes being a major contributor to funding state priorities. LB 289 will help better balance our tax system by increase the sales tax contribution, while offsetting reductions in property taxes used for school funding,” said Dan Nerud, Nebraska Corn Growers Association president.
When fully implemented, LB 289 would lower Nebraskans property tax bills anywhere between seven to 20 percent, with Nebraskans seeing reductions in taxes paid for schools in the range of 15 to 40 percent, depending on the school district where their property is located.
“LB 289 puts Nebraska on the right track for funding our schools and in the process delivers significant property tax relief for all Nebraskans. This is not the state’s largest tax increase as the Governor and others have suggested, but rather, this bill reflects one of the largest property tax reductions in our state’s history,” said Tim Chancellor, Nebraska Pork Producers Association president.
To help ensure the new revenues generated under the bill translate into property tax relief, LB 289 contains measures to slow growth in school spending by limiting growth in schools’ budget authority to the Consumer Price Index or between 0 - 2.5 percent. In addition to limiting school spending, there are several other benefits associated with the bill, including the timeframe in which property tax relief is delivered.
“LB 289 would start providing property tax relief in fiscal year 2019-20. This isn’t a drawn-out phase-in of relief. The property tax relief in this bill would start immediately and with the key structural changes, continue to deliver relief every year thereafter,” said Mike Guenther, Nebraska State Dairy Association vice-president.
According to the groups, the bill also provides a solution to the issue of runaway property tax bills when land valuations climb. Much like they did in the recent past on agricultural land valuation increases.
“By the state taking on responsibility for covering one-third of a school districts funding needs, LB 289 is helping prevent jumps in property valuations from instantly translating into massive increases in property taxes on property owners, regardless if it is residential, commercial, or agricultural property,” said Mark Spurgin, Nebraska Wheat Growers Association president.
According the organizations, the choice facing Nebraska lawmakers is very clear.
“This bill will deliver the much-needed school funding reform and tax relief that Nebraskans have been asking for. You’d be hard pressed to find a state senator who hasn’t said property taxes are the number one issue they hear about from constituents. All our groups agree that the time to fix these issues is now and the solution is before the Legislature. From our perspective, a “YES” vote for LB 289 is a vote for property tax relief and a vote in support of Nebraska property taxpayers. A “NO” vote on LB 289 is nothing short of a vote against Nebraska’s property taxpayers,” said Steve Nelson.