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Legislators on the Education Committee will begin a statewide tour this week to discuss K-12 school financing and look for methods to bring more property tax relief to Nebraskans.
Wanted: your best ideas for funding Nebraska schools
By Martha Stoddard / World-Herald Bureau
LINCOLN — Round two of Nebraska’s great tax debate kicks off Wednesday.
Last week the Tax Modernization Committee toured the state to collect ideas and opinions about revamping property, sales and income taxes.
This week it will be the Education Committee hitting the road for a series of public hearings.
The official topic of the hearings is state funding of K-12 schools.
But State Sen. Kate Sullivan of Cedar Rapids, who is chairwoman of the Education Committee and sits on the tax committee, expects to hear many concerns repeated from last week to this one.
In some ways, she said, this week’s hearings will be an extension of the tax committee hearings.
“There aren’t very many places we can look for revenue,” she said.
Schools are the top users of local property taxes, accounting for more than $1.9 billion of the $3.2 billion in property taxes levied for 2012.
That means discussions about reducing property taxes inevitably bring up talk about school finance.
Providing property tax relief is a key goal of the state school aid formula. The formula also aims to equalize educational opportunities for students from property-rich and property-poor districts.
Nebraska’s 249 school districts now share nearly $1 billion in state aid, which comes largely from state sales and income tax revenues.
School aid is the largest-single item in the state budget, and small increases in the aid total can mean big headaches for legislative budget writers.
In anticipation of the public hearings, the Education Committee floated the idea of reducing property taxes through the use of “local option income and/or sales taxes.”
The idea was deliberately scarce on details and definitions because committee members wanted to encourage broad discussions on the concept.
Sullivan said committee members hope to hear pros and cons of various policy directions where the concept could lead.
“We want to see if it’s something educators and the public think is worthy of digging deeper,” she said.
The committee members also hope to hear from people with new ideas about school finance or who can point out problem areas in the current formula.
The Education Committee study grew out of pitched battles during the recent legislative session over how to divvy up state school aid.
The committee is working to develop recommendations for the next legislative session.
Sullivan said the committee has not yet endorsed any particular plan or reached consensus on any recommendations.
She said any proposal for 2014 legislation likely will be modest. Bigger changes would be considered over a longer period.
It would not be “fair or realistic” to expect that any proposed revamp of the formula could be introduced, considered and passed that quickly, Sullivan said.
In Nebraska, the largest portion of school aid aims to fill the gap between what schools need to educate children and what they can get from property taxes and other resources.
The idea of using local option income and sales taxes addresses the resources side of the formula.
Other concepts put forth by the committee address the way school needs are calculated. Changes in those calculations could affect the total amount of aid required for schools, as well as how the aid dollars get divvied up.
Currently the state determines need based on past spending by school districts.
One suggestion would base the need calculation on a per-student figure. Another would include a minimum amount to cover fixed costs, such as the cost of a principal and a school building.
A third proposal would use some measure of the state’s economic health to set school spending limits. The Legislature sets the limits now.
The Education Committee hearings are set for Hastings, McCook, Dunning, Omaha, Crete and Macy.
PUBLISHED TUESDAY, OCTOBER 1, 2013 AT 1:00 AM / UPDATED AT 2:48 AM