Nebraska property taxpayers should start seeing double this year, with a new state law requiring all levels of local government preparing to collect more in property taxes the next year to hold a second public hearing and vote.
Too often, spending critics say, local politicians celebrate no increase in local property tax rates as no increase in property taxes. Then Nebraskans get their property tax statements in the mail, and their bills are higher than before.
For instance, the City of Omaha.
Mayor Jean Stothert proposed a budget that would hold property tax rates steady at 47.922 cents per $100 of valuation in 2020. But Omaha plans to collect more in property taxes in 2020 than in 2019 — about $11.3 million more.
The reason the city predicts the same tax rate will collect more revenue: The Douglas County assessor projects that the total valuation of properties within the city limits will increase by 6.65%.
Local officials say cities, counties, school districts and natural resources districts have long used the windfalls from valuation growth to cover the rising costs of governing, including inflation, salaries, health care and retirement.
Omaha City Council President Chris Jerram said he does not consider holding the tax rate steady to be a tax increase. Neither does Stothert. Both have said they realize that some constituents might disagree.
The Nebraska Legislature does. It unanimously passed Legislative Bill 103 in March to help rein in the growth of property taxes.
The bill’s sponsor, Sen. Lou Ann Linehan of Omaha, said her goal was to help voters see what’s causing Nebraska’s property taxes to rise — local government spending.
She also wanted people to have a chance to speak up earlier in the budgeting process.
“We have to be clear about language,” Linehan said. “I don’t know whether they should or should not spend. But taxes don’t have to go up. They could drop the levy.”
The new law requires transparency from local governments with property taxing authority in the form of a separate public hearing and vote when they plan to collect more in property taxes than the year before.
It also makes them advertise the separate public hearing in a newspaper of record.
Local governments that expect local property valuations to increase can avoid the hearing and vote by lowering their property tax rates enough to collect the same amount as they did in the previous year.
Spending by many local governments has been growing faster than inflation, Linehan said.
That affects the state’s bottom line because Nebraska spends almost $400 million a year on local property tax relief. For example, in 2020, Nebraska is set to spend $88 million on the homestead exemption, which offsets local property taxes for the elderly and disabled.
Local governments have for years filed reports with the state auditor that disclosed property tax collections.
The increased transparency that LB 103 requires offers both opportunity and risk for local elected officials, said Jim Vokal, chief executive officer of the Platte Institute, a conservative think tank co-founded by Gov. Pete Ricketts.
Vokal, a former member of the Omaha City Council, said he hopes that local leaders might think twice about casting votes that future political opponents could describe as votes to increase property taxes.
“This law requires them to hold a separate public hearing, explain why they want to keep the windfall and go on record,” Vokal said.
More reflection about the collective cost of increased spending by local governments — including bond issues — might help Nebraska avoid a voter revolt on property taxes, Vokal said. Taxpayers, he said, are “fed up.”
Linehan said she borrowed the idea for LB 103 from Virginia, where she and her family lived while she served in the State Department and as chief of staff for then-Sen. Chuck Hagel.
Omaha scheduled a second budget public hearing and vote for Sept. 10. Each will acknowledge that the city expects to collect more in property taxes in 2020 using the same property tax rate as 2019.