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The term “local control” reflects Nebraska’s priority of self-governance at the community level. Each school district, city, natural resource district, and the thousand miscellaneous government bodies are governed by local officials who establish policies specific to their locale. With the ability to set policy comes the ability to spend tax money, which must be generated from Nebraska taxpayers.
The result of the historical emphasis on local control has been the establishment of 2,659 different local governments across Nebraska. The cost of so many different governments is far more than the half a billion dollars spent annually for general administration costs. With so many different governments, operational duplication is inevitable. Local governments collect 56% of the total taxes in the state and spend 64% of all your taxes paid.
The annual taxing and spending of local governments in Nebraska only tells part of the story. Local governments in Nebraska have issued over $9 Billion in public debt obligations. Regardless of any changes in tax policy or spending rates, those debt obligations remain for you and your children. Local government debt equates to $4,820 for each and every Nebraskan, and is equal to 85% of the annual spending by local governments.
The burden of local government debt is not only on future taxpayers. Putting the immediate fiscal cost in perspective with the other priorities of Nebraskans is shocking. According to U.S. Census Bureau figures, Nebraska’s local governments spend in excess of $200 million annually to cover the interest expenses alone, a cost of over $100 per Nebraskan each and every year. Annual interest costs on local government debt exceed the value of the state Property Tax Credit Relief Fund. Interest on debt exceeds 5% of the total value of property taxes collected by local governments each year.
How did a population with a reputation for “pay as you go” and a general public sentiment against debt accumulate $9 Billion of local government debt? Through the collective actions of thousands of individual local government boards, none of whom are required to consider the tax burden or debt obligations any other government is placing upon a single taxpayer in their district. For a taxpayer, it is almost impossible to assess the entire scope of the current and future tax obligations being assessed them by the dozens of local governments.
One of my biggest surprises over the past four years in the Nebraska Legislature is the degree to which local governments view themselves as entities unto their own, without coordination with the larger policy goals of their community, county, region, or state. Coordination is almost non-existent. When the Legislature discusses policy that impacts local governments, the “local control” principle becomes front and center.
Nebraska is known as a “Dillon’s Rule” state. As described in the 1868 court case that established the doctrine, “municipal corporations owe their origin to, and derive their powers and rights wholly from, the legislature. It breathes into them the breath of life, without which they cannot exist. As it creates, so may it destroy. If it may destroy, it may abridge and control”. Thus, local governments are not entities unto themselves. Their creation, authority to tax, ability to spend, and areas of jurisdiction are granted entirely by the Legislature. They cannot exercise any authority not specifically granted to them by the Legislature.
Local governments choose how to implement state authorized taxing authority, set priorities for how to spend tax dollars, and constitute the majority of the tax burden on Nebraskans. With that local control must come local accountability.
At minimum, all local governments in a county should be required to hold a joint public hearing when setting budgets and tax rates. First, members from all boards and councils taxing citizens and spending tax money would be made aware of the totality of the tax burden placed upon their constituents by their fellow governments. Taxing and spending decisions made in isolation have led to the high local tax burden. Second, a single community hearing would allow for greater transparency for taxpayers and more effective voter engagement. Allow citizens to see a comprehensive picture of all the spending decisions, and the taxes that fund them, in a single public meeting.
I do not advocate for consolidation of more power in Lincoln. I do believe the coordination and cooperation among all local governments should be the operating standard. Program redundancies and turf wars raise the cost of government without improving service to the public. Local control will work best for Nebraskans when all local governments, and the state, work together.