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The past week the Nebraska Legislature began floor debate and advanced two bills beginning to address the disparity in property tax impact between agricultural land, commercial property, and residential property. The debate over the bills exemplified the differences in perspective among senators about the magnitude of the property tax problem, as well as the proper approach to addressing it. Although wide sweeping structural reform was not passed, initial steps were taken to begin addressing property taxes.
The first bill advanced to Select File was an amended version of LB 959, brought to the floor by the Education Committee. The most significant component of amended LB 959 is the removal of the minimum levy requirement for school budgets. Currently, there exists a minimum levy requirement for a school district to remain eligible for state equalization aid. This can create a disincentive for school districts to reduce their levy in response to increase in their property tax base valuations to avoid losing state equalization aid. As amended, LB 959 removes that minimum levy requirement. Technical changes to the calculation of the the averaging adjustment for determining enrollment in the aid formula were also included.
The second bill, LB 958, was a drastically amended version from the introduced copy brought by the Revenue Committee. The bill before the Legislature for debate included an additional $30 million in property tax credit directed to agricultural landowners. Additionally, restrictions on community college budget authority were also included. During debate the two issues were divided. An amended reduced amount in property tax credit for landowners, $20 million, was advanced to Select File. Due to the extended time of debate, the community college component remains but will be eliminated from the bill on Select File per agreement.
The extended and, at times, tense debate on the floor reflected the differences in priority among senators representing different interests. It is clear that there continues to be no clear path forward regarding broad structural changes to both education funding and the distribution of funding local governments among different classes of property owners.
These are the first of many very small steps forward to address the property tax crisis.There also remain two more rounds of debate for each of these bills, where language could change substantially. I encourage constituents to tune into the floor debate and gain a first-hand understanding of the dynamic at play within the Nebraska Legislature.
As always, please do not hesitate to contact my office with questions or to express your position on legislation at 402-471-2732 or email at firstname.lastname@example.org. For daily updates during the session, please follow me on Twitter at @JohnKuehnDVM.
Senator John Kuehn, District 38