NEBRASKA LEGISLATURE
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Sen. John Kuehn

Sen. John Kuehn

District 38

The content of these pages is developed and maintained by, and is the sole responsibility of, the individual senator's office and may not reflect the views of the Nebraska Legislature. Questions and comments about the content should be directed to the senator's office at jkuehn@leg.ne.gov

The second year of a legislative session is often referred to as a “short session”. Limited to 60 legislative days, time is a valuable commodity. With adjournment scheduled in mid-April, the Legislature will be holding session into the late nights for the next several weeks.  With many important issues yet to receive first round debate and a budget modification bill that has failed two cloture votes to end debate, time is of even greater importance.

By legislative rule, the budget must be advanced to the Governor by legislative day 50, which is Tuesday, March 27. The failure of the second cloture vote on Select File prohibits that from occurring. The Legislature will have to suspend the current rules to complete our budget modification process, which will take 30 votes. Additionally, the budget will require 33 votes to pass with the “emergency clause”. Normally a bill will become effective law 90 days after it is signed into law by the Governor. When a bill is passed with the emergency clause, it takes effect upon being signed. Because of the delays in the budget advancement by a minority of senators, if the budget fails to pass with 33 votes it cannot take effect before the end of the fiscal year.

While most of the focus of the current budget bill has been on the reductions needed to respond to decreases in state revenue, the bill also includes very important appropriations to meet increased needs. Most significant is an additional $30 million to meet the expenses associated with child welfare programs. The state has experienced an unprecedented increase in the number of at-risk children requiring placement outside of their home to protect their health and safety. The program will run out of funds by May and will be unable to pay those foster parents and other caregivers until the modified budget takes effect in July.  

In addition to the budget, any tax reform bill has yet to be debated on the floor.  There are another group of non-controversial bills, known as Consent Calendar bills that have not been addressed by the body.  Consent calendar bills are bills critical to address non-controversial but important changes to existing laws.

The increasing trend toward extended debate and use of the filibuster has consumed a significant portion of the legislative session. Cloture is a procedural motion to end debate and allow votes on the substance of a bill. In order to invoke cloture 33 of the 49 senators must vote to end debate. This two-thirds majority is among the highest thresholds in the country. The center of the rules discussion last session was to address the cloture issue.

Unfortunately, many issues have not even seen a vote on the bill, up or down, because of the inability to gain a two-thirds majority. In essence, current legislative rules and procedure have effectively created a supermajority requirement to pass any substantive legislation. Because of the time requirement involved in cloture, the time spent on extended debate consumes time for debate and passage of other legislation.

 

First round debate of modifications to the state biennial budget took place last week in the Legislature. At the center of the debate was a provision that would require private agencies that receive tax dollars who provide family planning services to have objective separation from abortion services. The requirement for a clear distinction between health care services and abortion is vital for compliance with federal law, which states taxpayer money must “not provide abortion as a method of family planning”.

The provision centers around a program known as Title X (the Roman numeral “ten” not the letter “x”).  Title X is a federal grant program that awards money to the Nebraska Department of Health and Human Services. DHHS then awards these dollars as grants to private agencies that provide direct services to patients with financial need. These services include screening for STDs, breast and cervical cancer, as well as pregnancy testing and contraception. Across the state 13 clinics receive Title X funds, providing these services to 27,954 Nebraskans at 41 different locations. In total, a little under $2 million of taxpayer money is distributed to these clinics to provide services.

In order for Nebraska to remain eligible to receive these federal funds, the state must be able to demonstrate compliance with federal law. In recent history tens of millions of federal dollars have been required to be repaid by the state due to failure to comply with federal program requirements. The federal law that prohibits taxpayer dollars from being used to fund abortion services through Title X reflects the overwhelming opinion of most Americans against the use of public funds for abortions.

The objective separation requirement in the intent language of the appropriation for the Title X program is essential to protect the integrity of the program because Nebraska Title X funds have been used for abortion services. A 2015 a report by the State Auditor identified the magnitude of the problem. The audit of one clinic, Planned Parenthood of the Heartland, found that Title X dollars were used to pay for physician fees for abortions, clinic manager time for abortions, fees associated with pathology of tissue from aborted children, and employee travel to provide abortions. All of these payments were prohibited by federal law.

Clinics that receive public money under Title X are paid in advance at the beginning of each month. Thus, illegal expenditures were paid from the fund. The payments were identified in the audit of clinic expenditures by the state. Had the federal government identified these payments for abortions services before the State Auditor did, Nebraska’s eligibility for Title X funds could be denied.

The importance of the intent language in the budget bill is best stated by DHHS CEO, Courtney Phillips. In a letter to me regarding the program and audit findings, she states, “This is to say that these expenditures placed the entire program at risk. The proposed language in LB 944, Section 71 provides greater clarifications, and with it program integrity. This helps ensure Title X funds are not misused and protects access for Nebraskans”.

The ability to tax is the most significant exercise of power by the government. Once collected, those public dollars are to be used to promote the common good. I, like most Nebraskans, find the use of taxpayer dollars to fund abortion morally repugnant. At the same time, I support access of all Nebraskans to essential family planning and reproductive health care services. The intent language in the current budget bill is critical to protecting vital access to health care through ensuring compliance with federal law and the will of the people.

Higher education in Nebraska is a diverse landscape.  An examination of the most recent reports by the Nebraska Coordinating Commission for Postsecondary Education demonstrates the wide array of options for the 136,917 Nebraska students enrolled in education after high school. Programs span the state in communities from Chadron to Hastings to Omaha.

There are four broad categories of higher education in Nebraska. The University of Nebraska system, which is composed of five campuses, the three campuses of the State College System, the six Community College networks, and the 20 private colleges and universities. Collectively, these programs confer over 30,000 degrees and awards annually. The University of Nebraska system, State College System, and Community Colleges are all supported by taxpayers. Independent colleges do not receive funds from state or local taxes.

Nebraska taxpayer support for public higher education in Nebraska is among the highest in the nation. Every student enrolled in the University of Nebraska system is subsidized with over $11,000 of state income and sales tax dollars each year, which amounts to over $300 paid by every Nebraska resident. Taking into account state General Funds and Property Tax support, the 39,000 community college students in Nebraska receive over $8,000 per student annually in taxpayer support. On a per-student basis, the state college system receives the least public support, with $5,600 annually.  

The University of Nebraska media blitz, advocating for additional state appropriations, gives the impression that they are the primary workforce development driver in the state.  While they are the largest system, they only make up about 39% of the enrolled post-secondary students in the state. The vast majority of Nebraska students are enrolled in other colleges and universities. When examining graduation outcomes, Nebraska’s private colleges award 38% of the state’s Bachelor’s degrees, even though they enroll 25% of the state’s students. Private colleges also awarded more Doctoral and Master’s degrees than the entire University of Nebraska system, without receiving any state tax money.

Nebraskans have made a significant investment in a highly educated workforce through a strong financial commitment to higher education. In the proposed budget, to be considered by the Legislature, $725 million is dedicated to higher education. Community Colleges will collect another $320 million in property taxes. At $1.4 billion, that exceeds the $850 million for Medicaid and the $974 million for state aid to K-12 education.

On an annualized basis of degrees awarded, Nebraska taxpayers spend $51,000 per degree awarded by the University of Nebraska system, $45,336 per Community College degree, and $30,000 for graduates of the state college system. They spend nothing on the 9,500 degrees awarded every year by Nebraska’s independent colleges.

I am a strong advocate for higher education. I am privileged to have earned a Bachelor’s degree in Biology and a Doctorate in Veterinary Medicine. I am honored to hold a position as Professor of Biology at Hastings College, providing me firsthand knowledge of the value of higher education and the challenges faced by colleges and universities in Nebraska.

What is missing in the current budget discussion about state funding of higher education is proportionality. A 2% reduction in state appropriations does not cripple workforce and economic development in Nebraska, despite the full page newspaper ads. Many colleges and universities across the state have adjusted their budgets to reflect the evolving higher education landscape without devastating their local communities.

Most disappointing to me is the lack of attention to the disproportionate manner in which state colleges are treated compared to the University system, as the numbers stated above clearly demonstrate. Nebraska’s State Colleges serve a high proportion of first generation college students with high academic and financial need, yet they receive the least public support per student of any of the public institutions.

 

Although public hearings and floor debate dominate the media coverage of the legislative process, what happens in the committee setting ultimately dictates the direction of bills introduced at the beginning of the legislative session. In Nebraska’s unicameral system, committees, and especially committee chairs, are allowed a level of discretion and control over bills unlike any other legislative body. Every bill introduced is required to have a public hearing. However, that is where equal treatment of a piece of legislation ends. The scheduling of the bills for hearing, the consideration of a bill by the committee in executive session for advancement, and the development of any committee amendments to a bill are all controlled by each individual committee chair.

When during the session a public hearing is scheduled can have a significant impact on the fate of a bill. If a bill does not receive a priority designation, it is highly unlikely it will be debated by the full legislature. Each senator gets to designate one bill as a priority, and each committee can designate two. The Speaker gets to select 25 bills as Speaker Priorities. The deadline for selection of priority bills was last week. Bills with hearings scheduled after the priority selection deadline are not likely to be selected as priorities or make it to the floor for debate.

Additionally, bills are scheduled for floor debate only when advanced. The earlier a bill has a public hearing, the earlier it can be advanced from committee to General File for full debate. The latter half of the session, as we are in now, becomes packed with many of the more complex and controversial bills that have been given a priority designation. Later bills are unlikely to be discussed even if advanced to General File.

Even if a bill has significant support by senators in the Legislature, it still must have the support of a majority of the members of a committee to be advanced to the floor. Determining committee membership is a complex process. Assigned by the Committee on Committees at the start of a new legislative session, committee membership is balanced among congressional districts. Determining which senators sit on a committee is a complex matrix that considers ranking of the members of a particular congressional district caucus, seniority, the caucus of the committee’s chair, and previous service on a committee.

Additionally, not all committees have an odd number of members.  Revenue, education, and judiciary, for example, have only 8 members. It is not uncommon for a bill to be deadlocked in a committee on a 4-4 vote, even if it has substantial support in the broader Legislature. If members of the Legislature want to debate a bill that has not been advanced by a committee, it requires a “pull motion” supported by a majority of the senators to advance it to General File.  Last year the first pull motion was used during my tenure in office.

In order for a bill to be considered for advancement from a committee, the chair must consider the bill in an executive session.  Committee chairs are given wide latitude to determine how their committee will operate, with some controlling which bills may even be considered during an executive session. Simply put, if a committee chair opposes a bill, they are within their authority under the current rules to never act upon it following the public hearing.

Given the nature of the committee process, a senator has the greatest influence on policy areas of the committees on which they serve. As a member of the Appropriations Committee over the past four years, I have spent a significant portion of my time working on the state budget.  Appropriations is the only committee that meets every day of the week, and thus is the only standing committee on which I can serve.  The other 40 senators serve on 2 or 3 different committees in different subject areas.

With less than half of the session remaining, the Nebraska Legislature will conclude bill hearings and move to full days of floor debate on February 28. If you would like to see which bills will be the focus of debate for the remainder of the session, you can access the list of priority bills on the homepage of the Nebraska Legislature’s website.  You can also access the agenda for each day and link to live coverage provided by NET.  

 

As a bill makes its way through the legislative process, testimony at public hearings and debate on the floor establish the intent of the bill and its impact on Nebraskans. Once a bill becomes law, they are typically only revisited when unintended consequences emerge or problems arise. Legislators often fail to look back and determine if the predicted outcomes were achieved.

A performance audit is a systematic, objective analysis of a government program to determine if it is meeting the policy objectives it was intended to accomplish. In the Nebraska Legislature, the Legislative Performance Audit Office conducts independent analysis of statutes, programs, and agencies to measure outcomes against specific performance metrics. For the past two years I have served as the chair of the Performance Audit Committee, which works with the professional audit staff to prioritize audit topics, establish the scope of the examinations, and release the findings to the public.

In recent years performance audits have been conducted on ACCESS Nebraska, behavioral health services, specific economic development programs, and the universal service fund just to name a few. Each of the reports is available to the public on the Legislative Audit Office page of the legislature’s website. The data they contain provides important insight for how to improve policy and make government programs operate in alignment with their legislative intent.

In 2015, the Nebraska Legislature passed a statutory requirement that all state tax incentive programs undergo a performance audit every three years.  The first audit of the Nebraska Advantage Act, the largest of the state tax incentives programs, was completed in 2016. Last year performance audits were conducted on the Research and Development Act and the Rural Development Act. The remainder of the incentive programs, much smaller in size, are currently scheduled for audits.

The initial audits of Nebraska’s tax incentive programs demonstrated the importance of clearly defined objectives, measurable expectations, and specific metrics during the legislative process. In the absence of these specifics, answering the question “is this program operating as intended” becomes a challenge. As chair of the Performance Audit Committee, I have been active this session helping address the need for better data about program performance.

At the beginning of the session I introduced a proposal to the Legislative Rules that would require any bill creating or changing a tax incentive program to include a logic chain with its statement of intent. This would detail the specific goals, metrics, and outcomes of the legislation on the bill at introduction. Although the rule was not adopted by the Rules Committee in its initial meeting, several senators have agreed to voluntarily develop this statement and include it with their bills. This will demonstrate how the process works and, hopefully, encourage adoption of the statements in the next legislative session.

The Performance Audit Committee has also introduced two bills that will improve the ability to conduct the statutorily required audits of the tax incentive programs.  LB 935 improves data sharing between the three executive branch departments involved in the tax incentive programs–Revenue, Labor, and Economic Development–as well as gathers information necessary to analyze the jobs created by the incentives.  LB 936 provides specific definitions to terms used to evaluate the incentive programs.  Both have been designated Performance Audit Committee Priority Bills and were advanced from the Executive Board.  LB 936 has been advanced through the first round of floor debate.

Looking back at prior legislation and measuring its impact is important to effective government. Objective analysis of both successes and shortcomings of a program help not only improve those programs, but also facilitate better bills in the future.

Public trust and confidence in government is essential for the success of a representative democracy. At the core of that trust is a transparent set of expectations for ethical conduct of elected officials and public employees with clearly defined consequences for unethical behavior. Voters expect state representatives to be held accountable for their conduct in their official capacity.

Outside of issues of campaign finance under the jurisdiction of the Nebraska Accountability and Disclosure Commission there are no ethics rules for members of the Nebraska Legislature. During my tenure in the Legislature a number of ethical issues have emerged with no guidance for resolution. While the current national discussion about workplace harassment has drawn attention to inappropriate behavior in government at all levels across the nation, the need for greater ethical guidelines and enforcement extends much broader.

For example, senators are required to officially disclose any conflicts of interest, but there are no consequences if they fail to do so. Furthermore, there are no restrictions preventing a senator from voting on an issue once they have disclosed a conflict. Senators can and have registered as a paid lobbyist for a special interest while advocating on the floor for those clients in their elected capacity.  No guideline exists to prohibit it.

In the last legislative session high profile cases about the personal use of state resources and expectations of a senator’s residency in their district brought to the public’s attention the absence of clear guidelines for conduct that most Nebraskans assume are in place. The typical voter is quite familiar with their own workplace guidelines, and expect similar standards for elected officials.

In addition to the lack of transparent guidelines for conduct, there is no process for addressing ethical concerns among members of the Nebraska Legislature or legislative staff.  Illegal activity defined by statute offers recourse via the criminal justice system and courts, but many breaches of ethical behavior may not necessarily be illegal. The absence of a process may mean improper conduct is simply not reported. It also fails to protect the rights of due process for those who may be accused of unethical conduct. Currently handled on an ad hoc basis, allegations may be treated unequally, based on popularity or politics of the individuals involved.  

This year I introduced LB 1099 to create an Ethics Board for oversight of state senators and employees of the Nebraska Legislature. The bill requires the establishment of a 7 member Legislative Ethics Board chaired by a senator elected from the entire legislature and 6 members drawn equally from each of the state’s congressional districts. The Ethics Board would be authorized to establish ethical guidelines, develop a process for addressing allegations of unethical conduct, and determine a system of consequences for accountability.

The public should be able to directly see the manner in which senators hold themselves accountable for ethical conduct. There should never be any concern that elected officials are permitted to operate under a different set of standards from the people they represent. Across the country 42 other states have Legislative Ethics Committees to address legislator conduct, and four others have Ethics Commissions that address ethics across state government, including the legislative branch. It is time to move beyond mere discussion and take concrete steps toward protecting the public’s trust in the ethics of our unicameral.

At the end of January all campaign committees in Nebraska filed a campaign disclosure with the Nebraska Accountability and Disclosure Commission. At the end of February, all office holders in the state will file a Statement of Financial Interests that disclose sources of income, gifts, and business relationships. These public disclosures are essential to transparent government. The public has a legitimate right to scrutinize money that is paid to elected officials, as the use of money paid to office holders represents a significant use of power.

As a citizen, you have the ability to go online and identify all sources of campaign contributions greater than $250. The information includes the name, address, and amount of all contributions. Furthermore, any money spent by the campaign in excess of $250 is also documented and available for public examination. State law places restrictions on the sources of campaign donations, as well as restricts the use of those funds to specific purposes. Voters can see for themselves which special interests, companies, and individuals provide financial support to a campaign.

When it comes to financial relationships between elected officials and special interests outside of campaign donations, current Nebraska law lacks transparency. While money contributed to campaigns is regulated, restricted, and documented, financial relationships are not. Elected officials are only required to report sources of income greater than $1,000. The same standards of transparency applied to campaign funds do not apply to financial arrangements for employment, contractual services, or grants that can amount to much, much larger amounts of money paid directly into the pockets of elected officials.

In order to improve the ability of the public to evaluate financial relationships that may influence the actions of elected officials, I have introduced LB 1130. The bill establishes a public reporting requirement based on an elected official’s Statement of Financial Interests. The disclosure requirement applies if the Governor, Lieutenant Governor, Secretary of State, Auditor of Public Accounts, State Treasurer, Attorney General, a member of the State Board of Education, a member of the Board of Regents of the University of Nebraska with the exception of student members, a member of the Public Service Commission, or a member of the Legislature reports income greater than $1,000 received from any 501(c)(3) or 501(c)(4) tax exempt organization.  When such a financial arrangement is present the non-profit organization must report all sources of revenue for the same reporting period.

Compared to many financial arrangements, non-profits represent a tax-subsidized, non-transparent form of directing monetary assets to elected officials in an unregulated fashion. The use of private wealth funneled through opaque and tax-exempt organizations to employ elected officials represents a significant exercise of political power. When voters cannot identify the source of those dollars, the influence on public policy is particularly troubling.

It is legitimate to examine how donations may influence elected officials. The $241,000 contributed by the Nebraska State Education Association to 21 candidates and $110,00 to their political action committee in the last election cycle warrants evaluation, as does the $80,000 contributed by Governor Ricketts to 15 senators. Both pale in comparison to the $269,190 awarded by a single donor, the Sherwood Foundation, to the nonprofit group run by Senator Adam Morfeld. Which has greater influence on the actions of an elected official: a few thousand dollars for campaign stickers, mailers, and mileage expenses, or a quarter million dollars that can be used to pay an elected official’s mortgage or car payment?

It is essential the public have a clear line of sight for what may amount to tens of thousands of dollars in money, benefits, and contracts awarded directly to elected officials by non-profit special interests. It only stands to reason that the internalized policy preferences and agendas of donors to nonprofits that pay elected officials can influence their actions. LB 1130 is an important step to improve transparency and accountability of elected officials and those who fund them.

Addiction to prescription opioid painkillers has reached the level of a public health crisis. According to the U.S. Department of Health and Human Services, 11.5 million people misuse prescription opioids, with 2.1 million Americans misusing them for the first time each year. A recent survey of farmers and farm workers revealed the magnitude of the problem in the agriculture community, as 74% surveyed reported having been directly impacted by opioid abuse. Annually, the opioid epidemic costs the national economy $504 Billion. Nebraska has seen a 25% increase in the rate of death due to opioid overdose since 2005.

Prescription painkiller addiction begins with a health care provider prescribing opioid painkillers to a patient. Although highly effective at managing pain, these medications have a high addictive potential if not used judiciously and patients are not carefully monitored. An International Narcotics Control Board report found that the United States consumed 83% of the global use of oxycodone despite being less than 5% of the global population. Each year 650,000 opioid prescriptions are dispensed every day.

Diversion of prescription painkillers is the use of medication by someone other than for whom they were prescribed. This may be the use of unused opioids by a family member, the theft of medications, the sale of pills, or, in some cases, the diversion of a prescription to an addict who has the prescription filled and takes receipt of the medication.

The aforementioned survey of farmers and farm workers, more than 3 of 4 respondents said it would easy to access a large amount of prescription opioids in their community without directly obtaining a prescription from a doctor. In order to address the diversion component of the opioid epidemic, I have introduced LB 934. In order to reduce the potential for dispensing controlled substances to individuals who may abuse them, LB 934 requires an individual who takes receipt of Schedule II-IV opiates to show a photo identification.

Twenty-five states have identification laws for the receipt of prescription drugs. While Oregon’s law is discretionary, the other twenty four states have at least one law that mandates the pharmacist request identification. Identification requirements have been utilized before as a tool to combat drug addiction. Current federal and Nebraska state law require identification for the purchase of over the counter products containing ephedrine, including Sudafed. You cannot receive a shipment of wine purchased legally to your home without providing ID when delivered. It only makes sense that positive identification should be required before being handed a bottle of highly addictive controlled substances.

Throughout my time in the Nebraska Legislature I have collaborated with my colleagues to provide options for our state to address the problem of prescription opioid abuse. Nebraska’s Prescription Drug Monitoring Program is now a national model. During this legislative session, my fellow senators and collaborators have introduced additional bills to tackle the crisis.  Senator Sara Howard has introduced a prescription limit for opiates prescribed to children. Senator Brett Lindstrom’s bill requires patient education about opioid addiction when being prescribed painkillers.  Senator Merv Riepe has proposed continuing education requirements for practitioners who prescribe opiates.

Collectively, the bills represent a package of legislation that builds upon a multi-year legislative effort to proactively get in front of the prescription painkiller problem. Fortunately, Nebraska has not experienced the same magnitude of crisis as other states. Through cooperation and common sense, we can confront this public health issue head on.

 

Your property tax bill is the product of two independent factors: the assessed valuation of your property and the levy rate set by the local government that spends the money. Neither of these values remains constant from year to year. Fluctuations in assessments, levy rates, and total taxes due create unpredictability in the tax bill for property owners.

For example, if a local government’s budget grows by 3% that does not mean your individual tax bill will increase that rate. Instead, valuation changes impacted by property sales far from your property and unrelated to your local market may increase your valuation dramatically. You may see the levy rate decrease, yet your total amount paid increase due to valuation increases of property across your taxing district. Changes in the valuation mix of different classes of property and a shift in the distribution of property value may result in your farm home taxes actually going down, while the taxes paid on your Ag land increases.

With both components of the property tax equation in flux from year to year, it is no wonder taxpayers are frustrated. During my four years in the Legislature, various proposals have been introduced that attempt to address the consequences of the current property tax system in Nebraska. Few have passed and none have fundamentally corrected the structural problem that exists. This session I have introduced a constitutional amendment, LR290CA, which would bring simplicity, transparency, neutrality, and stability to the property tax system in Nebraska.

If adopted by Nebraska voters, all property in Nebraska would be valued for property tax purposes at its market value on the date the owner of the property assumed title, determined by the actual purchase price. That valuation would not change until the property is sold to a new owner.

Fair market value of any property is only truly known when there is a willing buyer and a willing seller, both of whom know the uses and capability of the property, and money changes hands. Until that transaction occurs again, any valuation is an estimate at best. A home buyer in another community who is willing to pay more for a particular house based on their individual family wealth should not impact your tax bill. Investors who pay high prices for land on the other end of the county should not result in an increase in taxes for a young farmer trying to make a living on their family farm. New commercial developments subsidized by TIF projects should not raise the costs for an established business operating for decades in the town square.

If adopted, many of the frustrations of property tax payers would be eliminated. Gone are fluctuating valuations, equalization protests, and tax bills that make budgeting for families impossible. The complex and often confusing appraisal process is replaced with a simple and fully transparent valuation: the price on your bill of sale. Until you sell it and realize any increase in value, it does not change. Total property values in a district would have a more predictable rate of growth from year to year, providing greater stability to local governments and taxpayers alike. The system is neutral for all classes of taxpayers, since individual buying decisions, and those alone, determine your valuation for property tax purposes. The personal choices of other buyers will not cost other taxpayers on their own property.

This is a bold, structural change to how the market value of property is determined. Statutory changes to levy limits, both high and low, will need to be changed. Nevertheless, in the face of inaction by the Legislature to make incremental statutory changes to the current system, I feel compelled to place a bold, structural change before the public to consider. Many proposals fail to meet the standards of simplicity, transparency, stability, and neutrality.  This structural change to determining market value of property embodies them all.

 

For many taxpayers, understanding how their total property tax bill is determined can be confusing. When property owners receive notice that the assessed value of their property has been increased by the county assessor, sometimes substantially, they are understandably concerned. In most cases, the valuation increase means a tax increase.

Your property tax bill is determined by two factors: the assessed valuation of your property and the total tax levy rate set by the local political subdivisions in which you live. Neither of these numbers remain constant over time. Local political subdivisions establish a budget based on their spending plan. They then look at the total assessed value of property within their taxing district. The levy rate is set, within the bounds of levy limits, to generate the amount of revenue to pay for the predetermined budget.

Your property tax bill may go up, but the levy rate may stay the same or even decrease. If this occurs, the assessed valuation on your property has been increased. For many property owners, increases in the assessed valuation of their property has driven a significant rise in their property tax bill. For agriculture land owners, rapid valuation increases have created a dramatic and unprecedented shift in the total property tax distribution. That shift has most notably impacted the school equalization aid formula, TEEOSA, resulting in the majority of rural school districts in Nebraska receiving no state equalization aid.

The Nebraska Constitution requires property to be valued uniformly and proportionately. The value is determined based on an assessment of the market price of the property, or an estimation of what the property would be sold for if offered for sale in the open market between a willing buyer and a willing seller. Equalization is the process by which the assessed value of your property is adjusted to reflect the market value of similar properties for the purposes of determining your property tax.

When property owners feel the value placed upon their property for the purpose of taxation is in excess of market value, they can file an official protest with the county clerk using Form 422A.  They then must appear before the County Board of Equalization or their assigned agent to demonstrate why their valuation is not accurate.

Protesting your property valuation is a time consuming process. For many taxpayers, it means time away from work and family obligations to prepare for and attend the hearing. The standards for the information a taxpayer needs to provide to support their claim are unclear and vary from county to county. Taxpayers are often only given a few minutes to make a case that can have a significant impact on their family budget. For many the protest process is intimidating. Even after the protest hearing is complete, there is no consistent standard by which the Board of Equalization has to accept or reject the valuation.

When the county increases the valuation of your property for the purposes of taxation, it represents an increase in taxes. The burden for justifying the increase should lie solely with the government entity. It should not be the responsibility of the taxpayer to prove the value of their property.

Buffalo County provides an excellent example of the burden placed on property owners by the current system. Last year 1,972 valuation protests were filed with the County Clerk. That is an amazing investment of time and productivity by taxpayers to defend the valuation of their property, and it is down from an all-time record high of 2,566 in 2016. The result of those protests was a total decrease of $66.92 million in assessed property value, out of the original $283.69 million proposed. That amounts to 23.5% of the total valuation increase that was reversed following taxpayer protests.

Taxpayers should never be left wondering “why” their valuation increased, nor should they bear the burden of disproving a positive claim made by the government. In response to this need, I have introduced LB 905, which would require that at any hearing of the county board of equalization on a protest regarding real property, the burden of proof is on the county assessor to show that his or her assessed value is equitable and in accordance with the law.

I encourage county officials to proactively communicate with taxpayers, in detail, about why their property values increased. Every valuation increase should be made with understanding it is the responsibility of the county, not the taxpayer, to defend the increase. Clear, consistent, and objective standards of evidence should be available to taxpayers who wish to protest their valuation. The burden of proof for any government action, including taxation, lies with the government, not the citizen.

Sen. John Kuehn

District 38
Room #2000
P.O. Box 94604
Lincoln, NE 68509
Phone: (402) 471-2732
Email: jkuehn@leg.ne.gov
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