This past week has included political subdivisions holding budget planning meetings that will determine their tax requests. This is perhaps a good time to review how the system works and how your taxes are determined. Each year, your County Assessor determines the market value of your property as of January 1 of the current year. Once all the valuations are set, the collective values of the properties in each political subdivision become what is known as the property “tax base.” The property tax base is the first half of the equation when determining your individual property tax. The second half of the equation is the “mill levy,” which is set once the collective budget requests are set by the various political subdivisions with tax collection authority. Budgets or net spending requests ultimately determine property taxes.

To illustrate this point, the City of North Platte recently held its budget planning meeting. During the meeting, the proposed tax ask was $41.6 million, an increase of $189,275 or 2.49% from the previous year. However, because of the rate at which valuations increased, the City can reach that number by reducing the mill levy by 1.23%. If this budget is approved, it will be the third year in a row that the City has reduced its mill levy.

Keep in mind that the City of North Platte also collects a “local option sales tax,” which reduces the amount of its budget that has to come from property tax needs. Although sales tax growth is beginning to level off, it has grown significantly during the past three years. This is a direct result of our ability to recruit and retain retailers, including three TIF beneficiaries: the Mall renovations, Menards, and Hobby Lobby. The sales tax collections, personal property tax collections, and the effect these projects have had on growing our population all help reduce property tax askings.

At this point in time, sales taxes fund 28% of the city budget and are projected to bring over $11 million in revenue to the city this coming year.

The state is also doing its part to reduce property taxes, including by taking over the operating expenses of the community colleges. This has directly reduced property tax collections statewide by nearly $300 million annually.

The North Platte Public Schools Board also met last week and decided to forgo an additional budget increase of 5%. I applaud the Board for taking this action and focusing its spending on the growth of inflation and student body growth, rather than building a cushion by raising taxes at a higher rate.

In the end, the Legislature chose not to impose additional spending caps on school districts because, unlike their city and county counterparts, school districts are funded only by state and federal funds, along with property taxes. Yet, school districts have different student body demographics, varying tax bases, and varying geographic areas. This makes it challenging to use a one-size-fits-all formula for school districts. The TEEOSA formula has attempted to do this, but has fallen short, especially for rural school districts. More work is being done to resolve this challenge. However, for now, we must rely on local school boards to distinguish between “wants” and “needs” and take steps to protect taxpayers, all while providing a quality education for students. More work will be done in the Legislature to address this challenge.

It has been a pleasure serving as your State Senator. I have enjoyed the challenge and will continue to do my best to serve the interests of District 42. Please continue to reach out to me about issues important to you at 402-471-2729 or by emailing me at mjacobson@leg.ne.gov.