LINCOLN, NE – High property taxes on agricultural land is only a symptom of a much larger problem with inequity in the way Nebraska funds schools, and while band aid approaches to addressing high property taxes is a starting point, structural change is needed to address inequity in education funding. That’s the message Nebraska Farm Bureau President Steve Nelson delivered to state legislators during a key Nov. 12 hearing on taxes and school funding.
“The question isn’t if we should have good schools. It’s not whether farmers and ranchers are willing to contribute. The answer is yes to both. The real question is, ‘What is an equitable way to pay for schools?’ Our overreliance on property taxes is not equitable or sustainable from our perspective and if we don’t work together to fix this problem, it will force farm and ranch families out of business and further consolidation in agriculture,” said Nelson in testifying before members of both the Legislature’s Revenue and Education Committees.
Nelson argued the structural inequity in school funding stems from the state’s overreliance on property taxes to fund schools and the failure of the state to more broadly distribute sales and income tax resources in the form of state equalization aid. In 2014, roughly two-thirds of Nebraska schools receive no state equalization aid, the majority of which were smaller in student numbers and rural in nature.
“Our reliance on property taxes combined with the lack of state support puts the school funding burden on the backs of a small number of farmers and ranchers. At the same time, the majority of those people’s sales and income tax dollars are transformed into state equalization dollars that go to fund students in larger districts,” said Nelson. “Property shouldn’t be the only measurement of wealth for school funding purposes and it’s vital we broaden the scope of sources to fund schools.”
In pointing out inequities, Nelson noted in many rural school districts it is common for property taxes generated from farm and ranch households to financially support five to six students in a school district while property taxes on non-farm households often don’t provide enough dollars to support a single student.
“With the school funding scales so far out of balance, farmers and ranchers are questioning whether the state has abandoned us and our rural schools,” said Nelson. “It’s my hope we can work together to balance this responsibility for school funding and prove that’s not the case.”
According to Nelson, failure to address the problem jeopardizes the future of Nebraska agriculture, the fabric of rural Nebraska and the state’s broader economy.
“I’ve had the opportunity to travel the state extensively the last few years. On far too many occasions I’ve had farmers tell me they are making real decisions about whether to sell land because they can’t afford the taxes. We’re talking about state tax policy driving people off the farm or ranch. It’s unbelievable we’re having this conversation in Nebraska, but that’s how serious the situation has gotten,” said Nelson. “If we can’t solve this problem we’ll push both current and future generations out of agriculture and fewer farmers isn’t a good thing for rural communities, nor is it good for Nebraska, regardless where you live.”
In testimony, Nelson further acknowledge that the school funding issue is too big to completely fix in a short legislative session, but the Legislature has the opportunity to work on short-term fixes while examining long-term structural change.
“We’re clearly at a crossroads. Fixing this problem has been a long-time coming but we have to work towards a short-term solution to address the immediate property tax issue as well as finding long-term structural fixes to how we fund schools,” said Nelson.
The Nebraska Farm Bureau Federation is a grassroots, statewide organization dedicated to supporting farm and ranch families and working for the benefit of all Nebraskans through a wide variety of educational, service and advocacy efforts. More than 60,000 families across Nebraska are Farm Bureau members, working together to achieve rural and urban prosperity as agriculture is key to fueling Nebraska’s economy. For more information about Nebraska Farm Bureau and agriculture, visit nefb.org.