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Sen. Mike Groene

Sen. Mike Groene

District 42

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Home District Column 10/26/2017
October 27th, 2017

Why are Nebraska’s property taxes the 12th highest per-capita in the nation? It is how we fund public education.

In 1990, the Legislature over Governor Orr’s veto passed LB1059 “the Tax Equity Educational Opportunity Support Act”. The legislation was enacted to correct, at that time, the over reliance on property taxes (70%) to fund education. A goal was to fund a minimum of 45% of the total state and local cost of education with income and sales tax increases. To do so, sales tax rates were raised by 25% and income tax rates 17.5%. The mechanism used to assure all districts received state aid was to guarantee that a minimum of 20% of the income taxes paid by the citizens in their districts would be returned to them in aid. The promise made to the taxpayers was that their property taxes would decrease proportionally to the increase in their sales and income taxes.

By 1996-97 the Legislature broke their promise by enacting LB1050 and 806 which eliminated the guarantee of a state foundation aid of 20% income tax credit and eliminated the goal of the State’s share of funding at 45%. Those changes returned property taxes collected as the first source of funding for schools and returned state aid as a source to fill in the remainder. Also in 1996 they enacted LB1114 which established levy lids that promised local property taxes would be controlled by enacting lids on local government’s levy authority; schools were limited to 1.00. As we all know now, they did not consider the rapidly rising property valuations over the last 20 years which have driven up property tax revenues.

The only promise kept by (at that time non-term limited) Legislature was to raise your taxes.

Where are we now after 37 years of broken promises? According to the Census Bureau, Nebraska is 49th in the nation in per-cent of school funding that comes from the state and 2nd in the nation as to funding from property taxes; according to the “Tax Foundation”, the latest 2014 study has us 7th highest in the nation property tax burden on homeowners. Property taxes account for 65% of school funding. Out of a total of 245 school districts, 178 districts receive no state equalization aid; and so much for the promise that the state would cover 45% of state and local tax support for individual districts, this year only 13 districts received 45% or more of their funding from the State.

Since 2015 we have made small steps to keep past promises. In 2016, the Education Committee and Legislature enacted LB1067 that reinstated a small portion of the guaranteed income tax credit (2.23%). Now at least every school district receives a very small amount of state aid; prior to that, 81 rural school’s districts received zero dollars in aid through the TEEOSA formula. That year we also passed LB959 which incorporated my LB444 into its language, which eliminated the mandate that schools maintain a minimum tax levy to receive most of their state aid thus allowing fiscally conscious school boards a little wiggle room to control local property tax rates.

I give you this history of how state government unjustly funds public education on the backs of property tax payers in preparation for the debate on a petition effort that is in the works. It is commonly rumored to be called the 50% school general fund property tax/income tax credit initiative. It will give all
property tax payers in Nebraska who file a state income taxes a 50% refundable income tax credit on the amount they have paid to school districts for their general fund levy.

Our State constitution mandates that the state “shall provide for free instruction in our common schools”. Since it is obvious that past and present state officials have not fulfilled that state duty, it may be time for the second house of the legislature do so through their constitutional right to enact laws through the petition/initiative process. You will hear scare tactics from the opposition to the petition; ignore them and sign the petition. It is time for the taxpayers to send a message to state government.

Sen. Mike Groene

District 42
Room #1107
P.O. Box 94604
Lincoln, NE 68509
Phone: (402) 471-2729
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