There have been several articles written and numerous newscasts suggesting that, somehow, property taxpayers lost out on their 2023 income tax rebate with the passage of LB34. I will devote this week’s article to explaining the misunderstandings and bringing more clarity to the situation. In the end, no one lost out, but some did end up with a bonus depending upon the timing of when they paid their 2023 property taxes.

LB1107 was passed by the Legislature in 2020 and was referred to as the Nebraska Property Tax Incentive Act. It created an income tax credit to help offset the property taxes paid to your local public school district. In most cases, property taxpayers receive their property tax statement in December of each tax year after all the taxing authorities have approved their budgets. Those property taxes are then “due” on December 31 of that year, but in all counties except Douglas, Sarpy, and Lancaster, the taxes for the current tax year are not delinquent if the first half is paid on or before May 1 of the following calendar year, and the second half if paid on or before September 1, of the following calendar year. In Douglas, Sarpy, and Lancaster counties, the taxes must be paid on or before April 1, and August 1.

Property taxpayers who paid their 2019 property taxes in 2020 could claim the income tax credit on their tax return in 2021. The total credits claimed in 2021 was $82 million out of $125 million available. The difference represented those who failed to claim the credit. Property taxpayers who paid their 2020 property taxes in 2021 were able to claim their credit in 2022. Total credits claimed amounted to $422 million out of the $548 million appropriated. Taxpayers who paid their 2021 property taxes in 2022 were able to claim their credit on their 2023 income tax return. That totaled $562 million in credits claimed out of $763 available. Finally, taxpayers who paid their 2022 property taxes in 2023 were able to claim their credit on their 2024 income tax return. The total claimed was $477 million out of $809 million available.

In this summer’s special session, the Legislature passed LB34 which eliminated the LB1107 income tax credit and replaced it with a direct property tax credit; that means taxpayers will no longer need to claim a credit on their income tax return. Instead, a credit will appear on your property tax statement along with the existing property tax credit passed in 2007. This will allow all Nebraskans the ability to receive the credit without taking any further action, thus eliminating the gap between the credits paid and the credits available. The property tax credit will begin this year and will be reflected on your property tax statement be mailed to you in December 2024 by the local County Treasurer. The state will simply pay the credit directly to each county when the statements go to the taxpayers to make the counites whole.

Had LB34 not been passed, any property taxes assessed for the 2023 property tax year paid in 2024 would have been eligible for the income tax credit in 2025. Instead, you will automatically receive your credit on your 2024 property tax statement. If you pay your property taxes in the following year, you will pay the reduced property tax bill in 2025 instead of receiving an income tax credit in 2025. The amount of the property tax credit statewide will be $786 million as opposed to just over $500 million had the income tax credit still been in effect.

So, who got a windfall? Those who paid their 2023 property taxes in 2023 instead of 2024 and also claimed their income tax credit in 2024 before the special session will receive both the income tax credit and the property tax credit, but keep in mind that they also paid their real estate taxes well before they were delinquent. Regardless, all taxpayers are receiving more property tax relief because of LB34. The numbers are clear.

In the end, there was no other way to make the transition from the income tax credit, which was costly to apply for and not fully utilized, to the new property tax credit system where every property taxpayer receives their credit. It should also be noted that the state actually paid more to make the transition and every taxpayer will receive at least as much in credits as they would have under the original program. There is no lost year; it is simply a change in how the credit is received.

I want to remind everyone that the Lincoln County Farm Bureau has asked me to participate in a town hall meeting on September 21 at the McKinley Education Center beginning at 6:30 p.m. I hope you will consider attending to get any of your questions answered and share with me any concerns you have.

I look forward to continuing to hear from you regarding issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.

I spent time last week updating you on the legislative efforts to bring property taxes down. Although the Legislature has limitations on what they can do to impact property taxes – which are assessed locally – the steps we took are now coming together.

It has always made sense that cities, counties, and most local political subdivisions should fund their own needs, with some exceptions. Meanwhile, public education is one of the Constitutional responsibilities of the state.

Today, the state already provides significant funding to public schools, but most of that funding has gone to larger schools where their property tax bases are smaller in relationship to their student population and student needs. The Legislature took steps two years ago to provide $1,500/student in “foundation aid” to all schools to help take pressure off local taxpayers. Additionally, the Legislature provides funding to schools that accept transfer students who live in other school districts and are seeking a better fit for them to maximize their learning experience, which is known as “option enrollment.” This funding approximates the average cost of educating a student and helps to offset the cost to property taxpayers in the receiving district who now take on the cost of another student.

I generally support option enrollment when it is used to improve student learning and when the receiving school district uses the additional student population to maximize teacher/pupil ratios. I am concerned, however, that unless we see significant student population growth from the recent economic activity, steps will need to be taken to address overhead expenses and better utilization of facilities. In the end, every school district needs to continue to manage per-pupil costs while still maintaining sufficient teaching staff and teacher compensation.

I have been watching closely the steps that all our political subdivisions are taking during this budgeting season. Property values went up approximately 8% this past year, so mill levies must come down to stop property taxes from climbing at that same rate. My early read is that budgets are getting scrutinized, and we will indeed see mill levies drop significantly to hold property taxes in check.

As the November elections draw closer, now would be a good time to familiarize yourself with all the ballot initiatives and the candidates who will represent your interests on the various boards and commissions. There are several debates scheduled as well. Plan to attend the debates and ask the tough questions to each of the candidates to understand their views and their commitment to making decisions that align with your values.

As I wrap up my comments this week, I want to mention the lawsuit brought by a young mother suing to stop the repeal of LB1402 from going on the ballot. LB1402 was passed by the Legislature this year. It repealed the funding for the LB753 Opportunity Scholarship Program (tax credits for those donating to the program) but left the scholarship program in place with a $10 million annual appropriation to fund scholarships to low-income students who choose to attend a private school that best fits them. This program, in many ways, mirrors the public school “option enrollment” program. Conversely, the total credits in LB753 were capped at up to $25 million annually.

LB1402 was in response to a ballot initiative funded largely by the Nebraska State Education Association (NSEA) to place a repeal of the funding mechanism of LB753 on the ballot this fall. Despite the Legislature’s change in LB1402, the NSEA once again spent hundreds of thousands of dollars in paid petitioners to place an initiative on the ballot to repeal the legislative appropriation.

The lawsuit challenges the constitutionality of repealing a legislative appropriation. The Nebraska Supreme Court has bypassed the District Courts due to the timing of the suit and will hear the suit this week. This ruling could have a significant impact on future legislation.

Finally, I want to remind everyone that the Lincoln County Farm Bureau has asked me to participate in a town hall meeting at 6:30 p.m. on September 21, at the McKinley Education Center. I hope you will consider attending to get any of your questions answered and share with me any concerns you have.

I look forward to continuing to hear from you regarding issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.

I traveled to Thedford last week to meet with area residents regarding the next steps for the Sand Hills Discovery Center that is being planned to replace the former State 4-H Camp destroyed by fire two years ago near Halsey. I was able to secure $10 million in matching funds from the State to help fund the replacement of the facility.

After spending this past year looking for the best site to build the replacement facility, the committee decided to rebuild on the old site located on National Forest land. The decision was based on several factors, including the cost of land acquisition, infrastructure needs, and the fact that future fire risks are limited due to the loss of trees from the last fire. The strong support of the local Forest Service staff also played a huge role in selecting this site. The trade-off of building on leased land is the need to develop a detailed development plan prior to negotiating a lease and starting construction.

The development committee is comprised of two local representatives, two University/4-H representatives, and two Nebraska Community Foundation representatives. I will also continue to serve on this committee for now. We are also looking for local volunteers to serve on two committees to work on eco-tourism ideas and fundraising. The ultimate success of this project will depend on local support. I am grateful that the 4-H foundation contributed $2 million from the net fire proceeds, so with the dollar-for-dollar match from the Department of Economic Development, we now have $4 million collected. We expect that Phase One will require approximately $20 million. I have always said that economic development begins with stopping existing projects from leaving the area.

Last Thursday night, Julie and I attended the annual banquet for the Nebraska Family Alliance. Over 1,200 people were in attendance to celebrate the lives of the unborn and to remind us all how precious life is. The keynote speaker was Tim Tebow. Many of us know Tim as a Heisman Trophy winner, a first-round draft pick, and professional baseball and football player. We also know him for his strong religious faith. Tim shared how his father was convinced that he and his wife needed to have another child while they were serving as missionaries. During her pregnancy, his mother had serious complications and was advised to terminate her pregnancy by two separate doctors. However, she was determined to place her faith in the hands of God to protect her through the pregnancy. Later, she delivered their baby, a healthy baby boy that they named Tim. None of us know what God has in mind for us as we live our lives, but he remains in control always. His story is inspiring and one that we all can celebrate.

I have also gotten several inquiries regarding the impact that LB34 will have on the 2023 income tax rebate associated with LB1107. LB34 modified the LB1107 income tax credit to a “frontloaded” property tax credit. As a result, your 2024 property tax statement, which you should receive in December, will include the existing property tax credit as well as the new LB1107 credit. Property taxes are due on December 31 each year, but the first half is not delinquent until May 1 the following year, and the second half is not delinquent until after September 1 the following year. Because of this change, you will not be receiving an income tax rebate for 2023 property taxes paid in 2024, but you will receive your income tax rebate for 2023 if you paid them prior to January 1, 2024.

Going forward, any state revenues that exceed 103% of the budget will be automatically added to the property tax credit fund. State spending cuts, coupled with new revenue sources, are expected to significantly contribute to this fund going forward. Getting this mechanism in place was one of the most important accomplishments of the special session.

I also want to remind everyone that the Lincoln County Farm Bureau has asked me to participate in a town hall meeting at 6:30 p.m. on September 21, at the McKinley Education Center. I hope you will consider attending to get any of your questions answered and share with me any concerns you have.

I look forward to continuing to hear from you regarding issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.

Now that the special session has ended, it is time to reassess the progress made and chart the path forward from here. I’m looking forward to being able to spend more time in the District again. The Lincoln County Farm Bureau is hosting a town hall meeting at the McKinley Education Center at 6:30 p.m. on Saturday, September 21. I will be there to recap the special session, lay out my plans for the next session, and listen to your input on what is most important to you at that meeting.

In case you cannot attend, here’s a brief overview:

Governor Pillen brought a very aggressive property tax relief proposal to the Legislature that focused on eliminating sales tax exemptions, increasing so-called “sin” taxes, and using the new funding along with cuts in state expenditures and transfers of excess reserves to allow for the frontloading of property tax relief directly through your property tax statement. Although the new sales tax revenue was not approved, the frontloading of the property tax relief, the spending cuts, and the fund transfers were approved and will appear on your property tax statement next year.

The plan also placed caps on the amount that cities and counties can request from property taxpayers each year. This was a key component to help ensure that property taxes do not rise faster than inflation and the growth of local economies. Although these caps currently do not apply to public schools and other taxing authorities, there will be efforts in January to bring all political subdivisions under an appropriate cap. It is important to note that if there were no sales tax exemptions, the state would have collected over $7 billion in sales taxes in 2023. Instead, $2.3 was collected with the sales tax base. Total property taxes collected by local political subdivisions statewide was $5.3 billion in 2023.

It was clear early in the session that the progressives in the body were united in their opposition to any sales tax exemption repeals. They were joined by conservatives opposed to any new taxes, even if those new taxes would reduce property taxes. Although we were not able to bring more new revenue to replace property taxes, we were able to debate which proposed sales tax repeals could be on the table next session. That will be a starting point for the next Legislature. With the large number of term-limited Senators leaving the Legislature at the end of this year, the new freshman class will play a huge role in getting necessary legislation passed next year.

It is important to remember that all property taxes are assessed locally. About 50% or more of the property tax burden funds local public schools. Although the State has significantly increased its support of all public schools, the bulk of the state funding goes to the larger school districts. To the extent that the State can provide additional funding to public schools across Nebraska, reliance on local property taxes can be reduced.

As was done with community college funding, the Governor’s goal is to substantially fund general operating expenses for public schools with State dollars while still maintaining local control of public schools by locally elected boards. The primary change will be the funding source and the degree to which spending increases. The goal is to allow for spending to grow with the rate of inflation plus growth in students and other factors unique to individual schools; in other words, to meet the schools’ needs. Determining the right structure will take some time. I intend to meet with all public schools in District 42 before January to fully understand their individual challenges.

In addition to reforming our revenue collection and spending systems, we must continue to find ways to grow Nebraska. The greatest challenge to lowering our state’s tax burden is the fact that our state needs to grow by another 1 million residents. To do that, we must have a competitive income tax to attract and retain large employers to locate in Nebraska. We also need competitive property tax rates to make housing and new commercial development affordable. With investors’ interest in buying agricultural land as a hedge against inflation, we are seeing these properties’ values climb to lofty levels and taking the property tax burden up with the price increase. For those producers who are trying to make a living off the land, these taxes are devastating. In the end, all classes of real estate need relief if we want to be competitive.

This problem did not emerge overnight, and we will not find an overnight solution. It will be important for the next legislature to find common ground when solving our tax challenges. I am committed to working with the incoming freshmen, and those who do not align with me politically to find that common ground.

It is a privilege to represent you in the Nebraska Legislature, and I look forward to hearing from you regarding issues that are important to you. I can be reached at 402-471-2729 or by emailing me at mjacobson@leg.ne.gov.

The legislature adjourned on Saturday around noon after a debate on LR2CA. LR2CA is a constitutional amendment introduced by Sen. Brandt. If passed, voters would be able to vote on whether the Legislature should be allowed to value “owner-occupied” residential real estate differently than other classes of real estate. A similar constitutional amendment was passed for agricultural land many years ago and we now value ag land at 75% of market value. The goal of proponents is to assess owner-occupied residences at a lower value than other types of property. However, the definition of “owner-occupied” and the percentage of assessment for each class of real estate would be up to future Legislatures.

The challenge with this idea is that lost revenue would simply shift to the other classes of real estate unless there is a funding source to make up the difference. That could have a negative impact on other types of primary residences – like rented homes, duplexes, and apartments – as well as commercial property. And, given the number of Senators in support of LR2CA, it is very likely the voters would not see it on the ballot until the 2026 election. Modeling is not yet available for the Legislature to see exactly what the impact might be and changing the proposal later is challenging from a procedural standpoint. There are many Senators who support providing targeted relief to homeowners – who have seen an alarming rise in property taxes in recent years – and would like more time to fully evaluate the best path forward.

It is important to remember that assessed values in a taxing district are added together to determine the local property “tax base.” This value is then divided into the tax ask by each political subdivision to determine the mill levy. Capping values does not reduce taxes because the mill levy simply goes up to make up for the loss of value to raise the funding needed. Likewise, capping the mill levy does not reduce taxes if the values rise. The only way to hold property taxes down is to place caps on the amount of tax dollars requested by the political subdivision. If we want to be able to change valuation levers to make the property tax burden more equitable, then we will need to explore a number of categories and combinations.

The Legislature will reconvene at 9:00 a.m. on Monday, August 19. Our only business will be to check in to allow for the constitutionally required layover day between Select File and Final Reading for LB34 (which essentially replaced LB1), LB2, and LB3. We will then take up those bills on Final Reading on Tuesday. Both LB2 and LB3 are appropriations-related bills dealing with fund transfers and state spending reductions to help fund the gap in funding that could be created by LB34.

LB34, if passed, restricts cities and counties from increasing their property tax requests by more than the sum of an inflation index, with certain exceptions. The tax request can also be increased when there is real growth in the tax base (increases that do not involve value increases for existing property), increased spending for public safety (including police, fire, and the court system), to respond to declared emergencies, or by a vote of the people. No other revenue sources are capped. So, cities and still collect local option sales taxes, charge fees, and raise funds from locally operated utilities, garbage services etc. Counties still have inheritance taxes and fees generated from services they provide to the public. Both can also issue voter approved bonds.

LB34 also frontloads the LB1107 fund and converts the return mechanism from an income tax credit to a property tax credit that will appear on your property tax statement. This credit will be in addition to the existing property tax credit you currently receive. All the sales tax exemptions that were originally proposed to be repealed in LB1 were eliminated along with all so called “sin tax” increases and other new taxes. Since the new funding sources were eliminated, no additional property tax cuts could be provided.

Clearly the original plan was very aggressive and was always destined to be reduced. However, there were too many in the body who were unwilling to embrace any broadening of the sales tax base. While some tax exemptions, like the one for legal services, as never been exempt, many were put in place by prior legislatures. As the state allowed the TEEOSA formula to systematically eliminate smaller rural schools from receiving state aid, those schools were forced to rely on funding from local property taxes. If the state were able to increase the revenues available for school funding, our property taxes can be reduced. That was the goal of the Governor’s plan.

I do, however, believe that the debate during the special session did sort out many of the issues some had with sales tax exemptions. We had some important discussions about taxing “needs” versus “wants” for consumers, as well as end user taxes versus business-to-business transactions. It is likely that the next session will bring back many of those exemption will be back on the table as possible revenues to reduce property taxes, but at a more measured pace.

It is hoped that the special session will end this week and we all can return to our districts. It is my intention to hold a town hall meeting in North Platte soon to share information from the special session and get input for bills for the session beginning in January.

I look forward to continuing to hear from you regarding issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.

Julie and I were really glad to be back in the District this past weekend, which gave us the opportunity to attend the parades at Brady Days and the Logan County Fair in Stapleton. We then made the trip up to Mullen to attend the annual Hooker County Fair beef barbeque. I always enjoy meeting with constituents and hearing their concerns on a firsthand basis.

The special session of the 108^th Legislature has now entered its second full week. Last week began with a bang when several additional bills were introduced. Although the special session was called for the single purpose of reducing property taxes, many Senators found creative ways to introduce a total of 105 bills and legislative resolutions, a record for any special session.

Our rules require us to reference each bill to the committee of jurisdiction, and committees are required to hold a public hearing for every bill and resolution introduced. After the bills are heard in committee, each committee chair can decide if they want any bills heard in their committee to be voted on by the committee and moved to the floor. I don’t expect many bills to make it to the floor.

Additionally, any bill moved to the floor must be scheduled by the Speaker to be heard before it can be debated. I do not see the Speaker scheduling any bill that does not fit the call.

LB1, LB2, and LB3 are the bills introduced on behalf of the Governor. LB1 was referred to the Revenue Committee because it is the primary funding bill that creates some new taxes and removes sales tax exemptions on several others to fund property tax relief, as well as setting caps on local spending. LB2 and LB3 were both referred to the Appropriations Committee because they deal with the uses of state funds and make adjustments to state spending.

LB1 contains many revenue sources that the working group discussed but, in several cases, it also includes items that the working group rejected. The Revenue Committee spent most of last Tuesday hearing testimony on LB1. Most of the testimony was opposition testimony because every special interest group had some issue with certain items in the bill. However, the better lobbyists were clear that they only opposed certain items and could remove their opposition if certain changes were made to the bill. Others made it clear that they would oppose the bill in any form. Those individuals effectively lost their seats at the table by taking the approach. We even heard the President of the Nebraska Chamber of Commerce suggest there was no property tax problem to fix. I have heard some amazing statements before, but that one is hard to fathom.

One of the testifiers on LB1 was Todd Roe from Brady, the c-owner of Lazy RW distillery. I called Todd the night before suggesting that his testimony could go a long way to reducing the proposed tax hike on distilled alcohol. He did an amazing job sharing how this significant tax increase would impact their operation. He arrived in Lincoln before 9:30 and did not get to testify until late afternoon. I had many lobbyists and Senators suggest that his testimony was perhaps the best they heard all day. Thank you, Todd, for your commitment and your contribution to the local economy.

The Legislature will likely begin floor debate on Thursday once the Revenue Committee spends the first part of the week finalizing its proposal. Given the multitude of changes and comments on LB1, I expect the committee to use another bill to be the final vehicle to carry the proposed changes. Monday and Tuesday will be used to develop a final bill that can garner at least 33 votes for cloture. I am optimistic that we can achieve it. Not everyone will be happy with the final bill, but I hope everyone considers the alternative and focuses on actual numbers and not sound bites.

Meanwhile, there is no clear idea at this point as to how long the special session will last.

I look forward to continuing to hear from you regarding issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.

The special session of the 108^th legislature kicked off on Thursday morning at 10:00. Although we were scheduled to meet Thursday, Friday, and Saturday for bill introduction, the volume of bills getting processed was such that the Speaker decided to not have us meet on Saturday so that bill drafters could get caught up. The last day for bill introduction will be on Monday. It is anticipated that as many as 100 bills will be introduced. This is not what any of us expected, and this volume of bills will certainly extend the length of the special session.

The first three bills (LB1, LB2, and LB3) were bills introduced on behalf of the Governor. The first bill deals with spending caps and sales tax changes. It was intended to be sent to the Revenue Committee, but five members of the Executive Committee (which serves as the reference committee) voted to send it to the Government, Military, and Veterans Affairs Committee. I joined Speaker Arch and two other members in voting against this move. All of the Revenue Committee members served on the Governor’s working group and are in the best position to lead the hearings on this bill even though it deals with several issues.

Clearly, this was an effort to send a message to the Governor and move the bill to a potentially less favorable committee. However, Senator Brewer, who chairs the Government Committee worked with Senator Linehan (Revenue Committee chair) to immediately send a letter to the Referencing Committee to re-reference the bill to the Revenue Committee.

The question of re-referencing will be taken up on Monday. I expect the bill to be successfully re-referenced. LB2 and LB3 are appropriation bills referenced to the Appropriations Committee.

LB1 is a 139-page bill that contains far more changes than the working group agreed to during our last two meetings. With this in mind, do not read too much into the individual components of the bill. These will change significantly before the bill gets voted out of committee. It will change even more before the bill gets the support to advance on the floor.

I am not certain why the last changes from the working group were not made to the bill prior to introduction, but it will certainly evolve. During our last working group meeting, we agreed that no ag and business inputs would be subject to sales taxes going. It is also important to note that I am opposed to the advertising tax (primarily due to legal issues), think the amount of the increase in the spirits excise tax is too high, and am concerned about taxing legal and accounting services.

I also want to mention that Senator John Cavanaugh introduced LB17, which would terminate the Perkins County Canal project. This bill will be referred to the Natural Resources Committee on which I currently serve. I would be surprised if there’s any appetite to advance it.

It is unclear at this point how long the session will last and how it will end. But I do know that there are several in the body who do not want the session to be successful. So far, we have had a motion to adjourn Sine Die on Day 2 (with only four votes in support), we had the move to reference LB1 to a committee other than the Revenue Committee, and we will have an unprecedented number of bills introduced for a special session. Like in any session, all bills will be referred to the committee of jurisdiction for a hearing. Because of this, the entire week will likely be devoted to committee hearings. I would expect most committee chairs to not allow any bills that do not pertain to the subject matter to be voted out. However, any bill that gets to the floor would be subject to scheduling by the Speaker. He could choose not to schedule bills that get out of committee that do not fit the call.

No matter what takes place in this special session, the subject of property taxes will continue into the 2025 legislative session. I agreed to serve in the Legislature with one driving goal: To lower property taxes. I intend to accomplish this goal and protect agriculture in the process!

I look forward to continuing to hear from you regarding issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.

I want to begin my comments this week by taking a moment to thank Char Swallberg for all her efforts in organizing the annual North Platte Pow Wow. In addition to bringing amazing Native American dancers to perform traditional dances in colorful, authentic attire, the event also brought attention to the long-standing tradition of Native Americans participating in the U.S. military conflicts since the country’s founding. They have served in high numbers in all major conflicts, from the Revolutionary War to present-day deployments. It is events like that that bring another level of cultural enrichment to our area, along with visitors from around the Midwest who travel here to participate in or observe this wonderful event.

Those attending this weekend’s event also had the opportunity to gather at the Lincoln County Historical Museum to enjoy buffalo burgers and all the fixings. For those of you who have not taken the time to visit the Museum lately, I would encourage you to do so. Jim and his group of volunteers have done a tremendous job of bringing to life the history of our area. You will not regret it.

I will be traveling to Lincoln again this week to be present for the highly anticipated special session of the Legislature. The Governor’s working group will complete their work on Monday, July 22, and a bill outlining their recommendation will be ready for introduction later this week. As I mentioned earlier, there will likely be several bills introduced at the beginning of this session that will bring additional ideas for long-awaited property tax reform. I continue to get many emails outlining various concerns about the language in the final proposal. I will consider all input and keep it in mind as the debate takes place. In the end, no one will likely be happy with all aspects of the bill, but doing nothing is unacceptable. Property taxes have grown out of control, and, in the end, that is where my focus remains.

I continue to receive emails regarding the potential loss of local control if the state takes over the bulk of the funding for local school districts. I want to remind everyone that for many years, the Legislature has been criticized for its ranking of 49^th in the nation for state aid to public schools. If the Governor’s plan is successful, we could go to No. 1. The pushback comes from those who are concerned about any loss of “local control.” I want to make it clear that any plan will keep the local school boards in charge of local school district operations, but the local taxpayers will take a larger role in funding decisions since bond issues and overrides of spending limits will need voter approval.

I cannot stress enough that capping local property tax increases to a reasonable index will be imperative if we ever want to keep property tax increases under control. We all have our own household budgets to balance. Taxing authorities need to do the same. By limiting increases in property tax takings to the consumer price index after adjusting for real growth, the tax base should be sufficient to allow for normal spending increases. Cities that charge a local option sales tax will see additional revenue increases from removing several sales tax exemptions that will add to their revenues. Counties will still have inheritance tax revenues to add to their revenues, along with fees for services provided. In the plan, public schools would receive the same level of general fund dollars as they are receiving today, with increases likely tied to a formula, much like the TEEOSA formula. Those details will be the key to a final agreement.

Although Julie and I were unable to attend the parade in Grant this past weekend, we hope to get to Maxwell, Stapleton, and Mullen on August 3. We also plan to get up to Thedford this Saturday if the session is over in time for me to get away. I always enjoy getting around the District to meet with constituents in person and hear your thoughts.

I look forward to continuing to hear from you regarding issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.

As expected, the property tax working group made more progress last Monday, but we still do not have a final draft. A last meeting is scheduled for July 22 to pull together final thoughts. Senator Ben Hansen will likely draft the bill to be introduced once the expected special session begins on July 25.

If the plan moves as anticipated, we will be looking at funding the current general fund expenditures for public schools with state dollars instead of local property taxes. The money for state funding would come from a combination of state agency spending cuts, changing the LB1107 income tax credits to direct property tax credits and expanding those credits, new or increased taxes on tobacco, vaping, alcohol, and hemp products, and elimination of certain sales tax exemptions. If the Legislature cannot agree on changes that can fully fund this effort, there would need to be some ongoing property tax levy with the state making up the difference. All existing bonds and any new capital improvements that require new bonding would continue to come from local property taxes, just as they do for the local community colleges under their recent funding change.

I have heard from some asking how this approach differs from the EPIC tax proposal. The main difference is that the EPIC proposal would have eliminated all other forms of taxation other than a consumption tax (sales tax) and excise taxes. The ballot initiatives would have placed this language in the state Constitution so that only a Constitutional change could allow us to ever use any other form of taxation. Additionally, the EPIC option would have sent all funding to Lincoln with no guarantee that any of those funds would return to rural Nebraska.

Under the proposal we are currently discussing, the state would only take over the cost of general fund expenditures for public schools, and some level of local property taxes would remain in place. Sales taxes and income taxes would also remain. Local school boards would still manage the public schools (just as the boards of governors of the community colleges do and just as the Board of Regents does for the University). However, they would no longer have taxing authority. So, local control would be shared between the elected boards and the taxpayers. Should the state fail to fully fund the agreed-upon funding, the local public schools would have the ability to go back to property taxes to fund the difference. Keep in mind, however, that there will be limits on the rate of increases in funding going forward. The details of that funding are still to be worked out.

I have said from the beginning that no matter how we fund our local political subdivisions, spending caps must be in place if we ever want to get ahead of runaway spending that puts us right back to where we are today. With that in mind, the plan would also limit property tax asks for counties and municipalities as well.

I was recently on a call with the leaders of both the Nebraska Association of County Officials (NAACO) and the League of Municipalities. I explained to them that the proposal will likely limit their property tax ask to the greater of zero or the Consumer Price Index (CPI) plus “real” growth. The plan would also have allowances for declared emergencies, funding for public safety needs, or voter-approved overrides. They were both extremely unhappy with the plan and wanted to have no less than a 3% annual increase allowance regardless of the rate of inflation (CPI).

My question back to them was very simple. Are you telling me that if we go into a recession and the CPI goes to 1% or less, you still want to ask for a 3% increase in real estate taxes from local taxpayers? They responded that they didn’t know if they could curb their costs. My follow-up question was to ask them how local taxpayers on the brink of losing their homes will find the additional funding to pay higher taxes. A 3% annual tax increase over a three-year period would equate to a 10% compounding increase in property taxes. Does that make sense to you?

This type of opposition – so far unsupported by historical or projected numbers for local spending needs – is why property tax reform has been so difficult in the past. I remain committed to doing what is necessary to make progress in reducing your property tax burden regardless of the hurdles placed in front of us.

I look forward to continuing to hear from you regarding issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.

As I write this article, I am reviewing all the information received over the past few months to prepare for the last of the scheduled property tax working group meetings to be held at the Governor’s residence on Monday, July 8. I will focus my comments this week on where we go from here and what we might expect to take place during a special session that is tentatively scheduled to begin on July 25.

Although the Governor has floated many of the provisions discussed by the working group during his town hall meetings, the final proposal from the working group will not be complete until after the July 8 meeting. At that time, the working group proposal will be made available to all the members of the Legislature. As I have mentioned in the past, this is a framework but certainly not the final bill. Every Senator will need to bring their ideas to the table to get the necessary 33 votes.

The working group has focused on removing most, if not all, of the public school “general” fund expenses from the property tax rolls and replacing them with funding from the state. The new state funding would need to come from eliminating certain sales tax exemptions, creating and/or increasing certain “sin” taxes (cigarettes, vaping, skill games, and alcohol), and cuts in state spending. The framework of the plan would also include using the LB1107 income tax credit dollars to help fully fund the plan.

The primary challenge for the working group is to determine which sales tax exemptions should be considered for repeal and what other products or services should be added to the sales tax rolls to generate the necessary funding. The goal will be to bring total property taxes down by at least 40% and bring sales taxes more in line with income and property tax revenues.

It is always important to remember that property taxes are assessed locally, and all the funds generated from property taxes remain with the local political subdivisions. Meanwhile, the state collects income taxes and sales taxes to fund the bulk of state operations. Local municipalities are allowed to add an additional “local option” sales tax to the state’s 5.5% sales tax that is kept locally to use those funds to hold the line on property tax increases.

Public schools rely almost exclusively on local property taxes and funds from the state to cover the operations costs. Meanwhile, they must fulfill many federal and state mandates that all cost money. It is also important to remember that our state Constitution requires the state to provide public education for all school-age children. At this point, there are 244 local public school districts ranging in size from 53 students (McPherson County) to 53,000 students (Omaha Public Schools). Every district is unique. Family incomes, property values within the districts, students with special needs, and students where English is their second language (ESL) are all examples of why every school district has different funding needs and local funding sources.

The TEEOSA formula was created many years ago to try to determine how to best balance every school district’s funding needs by targeting state funding to districts with higher needs and lower resources. However, the current formula has shifted most of the TEEOSA funding to about 27 of the largest schools or towns with higher numbers of ESL students. North Platte Public School is the only school district located in Legislative District 42 that receives TEEOSA funding. Each of the other school districts began receiving “foundation aid” of $1,500 per student last year when the Legislature appropriated $325 million in “new” annual funding for public schools across the state.

I expect that any property tax reform proposal will include a grandfathering of any existing general funds with a formula to provide for increases as needs change. My goals are to ensure that rural Nebraska does not lose out if the formula is changed and that rural Nebraska does not take on a disproportionate tax burden when all taxes are considered. I remain opposed to adding agricultural inputs to the sales tax rolls and will continue to look to make changes so that all businesses are on a level playing field when it comes to the taxation of property, sales, and income.

Regardless of how we decide to change tax revenue sources, we must set hard spending caps that account for actual growth and inflation but curb waste. Without spending limits we will be wasting our time. Property taxes are currently rising at a rate of $1 million per day. This is not sustainable. Every political subdivision must reevaluate its spending and focus on “needs” versus “wants.” I have received many emails and calls from constituents paying more in property taxes than in their total mortgage payment. Many are at risk of losing their homes. For that reason, I will be looking for compromise on any plan to achieve the necessary property tax relief.

I look forward to continuing to hear from you regarding issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.