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Last week I initiated a discussion on how property taxes and school financing work in conjunction with each other. As promised, this newsletter continues where I left off.
While the basic concept of LB 1059 has not changed since 1990, the statutes governing state aid have been tweaked several times. Many of those changes were made to try to direct equalization aid to districts with needs such as high transportation costs, high demand for special education or large number of students living in poverty.
Local property taxes are generated from a school district’s tax levy and the amount of value placed upon homes, businesses and agricultural property for tax purposes in its jurisdiction. School districts are among the 31 types of political subdivisions that rely on property tax dollars in Nebraska. Among these are cities, counties, community colleges, natural resource districts, and sanitary improvement districts. But school districts use 60 percent of all property taxes collected in the state.
While all Nebraska school districts receive some state funding, it is important to note that not every school district receives funding from every state source.
Since the passage of LB 1059, the Legislature has tried other ways to curb schools’ reliance on local property taxes, including the property tax limit passed in 1996. By law, the maximum property tax levy for school districts is $1.05 per $100 of property value.
The recurring message from property owners across the state is the same: they pay too much in property taxes. And the push to reduce property taxes has been a recurring theme in the debate over how schools are funded. That point was consistently raised during debate of LB 1059 in 1990 and again took center stage during the Tax Modernization Committee and Education Committee hearings in 2013.
LB 1059 tried to address these concerns by increasing sales and income taxes to take some of the pressure off property taxes as a school funding source. LB 1114 (1996) established the property tax levy limit.
Nonetheless, Nebraska today relies more on local property taxes to fund public schools than 48 other states.
The heavy reliance of local property taxes and low level of state support in Nebraska have been noted in four major tax studies in the state’s history: 1) a 1962 study (McClelland) 2) the 1988 “Syracuse Study”; 3) the 2007 Burling Commission; and finally, the Tax Modernization Committee of 2013.
In 1972 voters approved a constitutional amendment which allowed agricultural land to be valued in a non-uniform manner relative to other property. Agricultural land can be valued at its market value in agricultural use under this provision. The voters passed a subsequent amendment of this same language in 1990, after a 1987 Nebraska Supreme Court decision invalidated agricultural land valuation practices in use at that time. This amendment authorized the current practice of valuation of agricultural land at a reduced percentage of its agricultural use market value. Today, Nebraska state law authorizes valuation of such property at 75% of market value in agricultural use.
Property taxes in the rural areas of the state have increased significantly compared to the urban areas. For instance, in Hamilton County agricultural property taxes have risen 180% over the last 10 years. In some urban areas property taxes have only risen 40% over the past 10 years. With most government subsidies being phased out and producers’ margins at break even or below it is no longer a fair and equitable tax. This year there are a two bills (LB 293 and LB 350) that address the dramatic rise of agriculture valuations, which have caused significant increases in property taxes. Each bill changes the current rate of valuation from seventy-five percent of its actual value to sixty-five percent.
I don’t see these bills as an absolute answer to increased property taxes but as one way we can start chipping away at the problem. Lowering the valuation of agricultural land down to 65% provides little relief to the rural areas of the state. Schools will just raise the levy and so the money will come from the same people that pay the high property taxes. I would rather see a fundamental change in the way we fund education in Nebraska so that we might have permanent property tax relief.
Additional bills that address the property tax problem are still being considered by several committees. As proposals are advanced to the full legislative body we will start exploring other options.
The overriding issue expressed this session, and has been over the past several sessions, is that property taxes are too high. And you can’t talk about property taxes without talking about state aid to education. In order to demonstrate how these two subjects correlate with each other I will conclude my comments next week about school funding, property taxes and what has lead us to the point we are at today.
The primary sources of funding Nebraska’s schools has always been local property taxes. Until 1965, the primary means of financing state government came from a general state property tax. That’s when the Legislature created the first state income tax, which triggered an existing constitutional mechanism to automatically eliminate the state property tax.
In 1966 the business community convinced voters to repeal the state income tax. The agricultural community countered with its own ballot measure to eliminate the state property tax, which passed. That left the state without any real source of revenue.
As a compromise in 1967, the Legislature established a state income tax and a state sales tax as sources of revenue for Nebraska. The Legislature intended to have the state cover 40 percent of the cost of K-12 education through the School Foundation and Equalization Act. However, the most the state ever covered was 13 percent, despite several legislature efforts to correct the underfunding of the overall state aid formula. So schools continued to rely on local property taxes for the bulk of their funding. Today the state only sends approximately 2% of income taxes back to local schools outside of the TEEOSA equalization funding.
By the 1988/89 school year, there were significant tax and spending disparities between school districts across the state. School district property tax levies ranged from 75 cents to $3.25 per $100 of property valuation – with the highest rates in districts with low property wealth. That meant the owner of property valued at $100,000 for tax purposes would have been paying anywhere from $750 to $3,250 a year in property taxes to the local school district, depending on the location of the property.
Even with the much higher tax levies in low-wealth districts, property tax disparities were so large – and state support did so little to address them – that the districts with the most property wealth had more than five times as much total funding per student as the lowest district.
The ongoing debate both inside and outside the Legislature over improving school district organization and financing prompted the Legislature to create a school review commission in 1988. In its final report, the commission concluded that “the burden on property for school support is excessive by any standard of measurement, resulting in inequities to taxpayers and a narrow and unstable tax base for schools.”
In 1990, the Legislature passed a comprehensive education and revenue reform measure (LB 1059), known as the Tax Equity and Educational Opportunities Support Act, or TEEOSA for short. The measure increased state support for school districts by attempting to shift a significant portion of K-12 funding from property taxes to state income and sales taxes.
LB 1059 set the basis for the present state aid formula and replaced the School Foundation and Equalization Act that had been in place since 1967. The overall goal of LB 1059 was lowering property taxes. The bill raised state sales and income tax rates to broaden the available financial support for public schools, attempting to lessen the reliance on local property taxes, and created the basic concept for the present state aid formula.
That concept (Needs minus Resources = Equalization Aid) is meant to provide enough state aid to a school district to help make up some of the difference between its needs and the local resources it can tap, such as taxable property. This difference is called “equalization aid.”
TO BE CONTINUED NEXT WEEK….
Motorcyclists in Nebraska no longer would be required to wear helmets under a bill heard by the Transportation and Telecommunications Committee last week. LB 31 would repeal the law that requires a motorcycle or moped operator or passenger to wear a helmet. Violation of the law is an infraction punishable by a $50 fine. There are just three states that have no helmet law: Iowa, Illinois and New Hampshire. Twenty-eight states require younger riders of various ages to wear protection.
Two years ago a bill was introduced that exempted anyone who was 21 years of age or older who operated or rode on a motorcycle from wearing a helmet. It also required that eye protection be worn. After several days of floor debate and a number of attempts to amend it the bill was Indefinitely Postponed.
Senator Bloomfield, the introducer of this year’s bill, LB 31, feels the helmet law violates his liberty and is a form of government paternalism. He feels that adults should be able to make decisions that affect their lives. We all make decisions that have very real and personal impacts on ourselves, our families and others every day. We keep drifting away from taking personal responsibility for our decisions. I am leaning towards supporting this bill if amended to apply only to those 21 and older but many questions remain unanswered. I think that we all realize that riding without a helmet increases the likelihood of a head injury in any accident. All drivers in Nebraska are required to have a minimum amount of insurance. Medical coverage many times only amounts to $5000 or less. I would like to see more data from the insurance industry on how the helmet bill affects the cost of insurance for drivers of motorcycles and the average motorist. What percentage of accidents were caused by other vehicles? What is the real cost to the taxpayer for medical care for helmeted or helmetless riders?
A number of people on both sides of this issue testified before the committee.
Supporters of the bill said repealing the law would add tourist dollars to the state’s economy, with more riders using Nebraska highways on their way to the Sturgis Motorcycle Rally in South Dakota. Others who supported the bill said they know motorcycles are dangerous but think that riding without a helmet enhances the motorcycling experience and that everyone who rides knows the risks.
Opponents who testified challenged that assertion and said the costs of repealing the helmet law – both in dollars and human life – would outweigh any potential benefits. One testifier said that it costs millions to treat significant motorcycle injuries and eliminating the helmet law would result in an additional $12 million in added medical costs each year, with much of that burden falling on the state. This number according to data I have seen does not seem realistic. A representative of the National Transportation Safety Board also spoke in opposition. He said that helmets are proven effective in low and high-speed crashes and they are the best way to avoid injury.
The Nebraska Office of Highway Safety reports that in 2014 there were 20 motorcycle fatalities, 484 were injured and that the average operator age of a fatality was 36. There were 9 alcohol-related fatal crashes with their average blood alcohol content being .10. Nebraska has 97,332 licensed motorcycle drivers. Of those, 1,172 are 20 years old and under.
Issues such as this can be extremely emotional if they have affected you or your family so I try to look at the facts and work to protect the interests of my constituents and what is best for the State of Nebraska.
The committee has not taken any action on the bill at this time.
Your opinion is important to me. What do you think? Contact me at firstname.lastname@example.org or by telephone at 402-471-2630 or by U.S. mail at State Capitol, District 34, Lincoln, NE 68509.
A bill that was heard before the Transportation and Telecommunications Committee earlier this year is one that I have a personal interest in and one that I think is a good way to save lives. LB 47 requires applicants for drivers’ licenses or identification cards to answer the question regarding whether to place their name on the Donor Registry and donate their organs and tissues at the time of death. Currently, applicants do not have to provide an answer to this question, as it is optional.
Current law provides that a donor’s status is not changed by the suspension, cancellation, revocation or impoundment of a license or card. This legislation clarifies that the expiration of a driver’s license or identification card shall also not change the donor’s status, making it consistent with statutes in the Uniform Anatomical Gift Act.
If a person was previously a donor, but decided to no longer participate and marked NO to the question, the Department of Motor Vehicles uploads a list of changes to the Donor Registry, who then takes the name off of the registry. A person can change their status at any time by accessing the Donor Registry on the Internet.
The purpose of LB 47 is to increase the number of donors in Nebraska. Currently just over 750,000 Nebraskans are registered with the Donor Registry as an organ and tissue donor. Approximately 98.4% of Nebraskans registered as donors became registered through the application process for a driver’s license or state identification card. However, approximately 10.5% of applicants do not respond to the question asking whether they want to be registered as a donor.
With the question optional, only 55% of Nebraska drivers’ license and state identification card holders are registered as donors. Nearby states, where the question is mandatory, have experienced higher participation rates than in Nebraska. If this legislation helps boost the number of Nebraskans registered as donors, we will be able to help many more people. Each organ donation may directly benefit as many as 8 people, while up to 50 people may directly benefit from a single tissue donor.
The Legislature has made great strides over the years in encouraging Nebraskans to donate the gift of life to those suffering and facing the prospect of death due to the failure of an organ. However, at any given time, there are 500 Nebraskans waiting for an organ or tissue transplant. Some must endure years of dialysis or other procedures until a donated organ or tissue is found. Unfortunately, some die while waiting.
I am registered as an organ donor myself and I think LB 47 is an ideal way to increase donor registration so those Nebraskans that need organs and tissues can get them. I would encourage each and every one of you to make sure you are on the donor registry list.
During the hearing, the Department of Motor Vehicles testified that they had some concerns. They stated that since the organ donation question is mandatory, if a person does not answer it, the Department cannot issue them a license. This concern and others are in the process of being resolved by committee members with the intent of getting the support of everyone. Hopefully we can find a resolution and then advance the bill for consideration by the full body of the Legislature.
I want to know what you think. You can contact me at email@example.com or by telephone at 402-471-2630 or by U.S. mail at State Capitol, District 34, Lincoln, NE 68509.
It’s early enough in the session that committees have not advanced a lot bills to the full Legislature for consideration, so I thought I would talk about a number of proposals that have had a public hearing by the Transportation and Telecommunication Committee – of which I a member.
The Transportation and Telecommunications Committee meets on Monday and Tuesday afternoons and is responsible for processing legislation involving the following subject areas: Motor Vehicles – driver licensing, motor vehicle registration and titles, rules of the road, driving under the influence, ignition interlock, texting or use of cell phones while driving, size and weight, equipment, handicapped parking permits; Highways – highways and bridges, roads, State Highway Commission, motor carriers, bicycles; Railroads – grade crossing, transportation safety districts, railroad equipment; and Common Carriers – pipelines, commercial vehicles, telephones, telecommunications, information technology, enhanced wireless 911, and Public Service Commission.
Bills that have come before the Transportation and Telecommunication Committee include:
LB 39 clarifies that motorists be required to follow the same passing laws for bikes as they do for cars; gives bicyclists the right-of-way when operating lawfully in a crosswalk; and clarifies that bicyclists may legally ride two abreast on shoulders of a highway when it is wide enough to do so.
LB 47 requires applicants for drivers’ licenses or identification cards to answer the question regarding whether to place their name on the Donor Registry and donate their organs and tissues at the time of their death. Currently, providing an answer to this question is optional.
LB 94 provides a process for a county treasurer to issue a title with a lien recorded for a motor vehicle that is sold in Nebraska and intended to be removed from the state by a nonresident customer.
LB 95 expands the definition of the term “bicycle” to include devices with 2 or 3 wheels, operative pedals and an electric motor not exceeding 750 watts producing no more than one horsepower propelling the bicycle at no more than 20 miles per hour.
LB 122 permits the operation of a class of mini-vehicles called Utility-Type Vehicles (UTVs) on the public streets and roads subject to the regulation and consent of the local governing board.
LB 220 authorizes the design and issuance of a new classification of motor vehicle license plate, the Nebraska 150 Sesquicentennial Plate.
LB 275 is a bill which I introduced and it is intended to clarify ambiguity with regard to a subsequent offense by a motor vehicle driver who has become eligible to have their driver’s license reinstated on the underlying revocation but remains suspended for the initial conviction of a variety of offenses, including motor vehicle homicide, failing to stop following an injury accident, 2nd driving under the influence, 3rd 4th or 5th aggravated; and driving under the influence causing serious bodily injury. This bill was brought to me by the County Attorney’s Association and originated from the Merrick County Attorney’s office.
Because I am a member of the Transportation and Telecommunications Committee, I was selected as a member of the Nebraska Information Technology Commission (NITC). The NITC is a nine-member commission that promotes the use of information technology in education, health care, economic development and all levels of government service. I will serve as an ex officio, nonvoting member.
For more information about the bills mentioned above or any other legislation proposed by the Legislature you can go to www.NebraskaLegislature.gov or you can contact me at 402.471.2630 or firstname.lastname@example.org.
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