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Economic growth is driven by the old real estate adage: The top three reasons real property sells are “Location, location, location!” Union Pacific’s railyard is in North Platte because it sits on the Platte River’s natural transportation route and lies at the midpoint of the United States; its national location is the paramount reason. Regionally, location again is the reason the Walmart distribution center is in North Platte and on a smaller scale, why North Platte is considered a natural place for medical and lodging facilities.
In a perfect world, the economy moves smoothly and government concentrates its efforts on providing public safety, streets and utilities. Problems start to arise when government tries to become more than the supplier and conduit needed to deliver public services to citizens and businesses. When government expands into areas of public wants such as entertainment, tourism, and attempts at job creation, taxes must go up to pay for those activities. High taxes then in turn create a barrier to economic development that would naturally occur. For businesses, location now becomes secondary to simply being able to make a profit.
A recent example is a company’s interest in building large-space warehousing facilities in North Platte. Due to the growth of the marijuana industry in Colorado, the cost of warehousing has tripled there. The natural response is for warehousing services to expand to nearby locations in states where marijuana is not legal. In these states, the marijuana industry cannot compete for space with construction material and other commodity sellers who rely on reasonable storage cost in order to be profitable. North Platte’s location fits that description, but apparently our high state and local taxes have raised a barrier to the warehouse investor’s ability to profit from their investment. Even North Platte’s ideal location can’t overcome burdensome taxation. Thus starts the vicious cycle of tax abatement for new commercial projects and tax increases for existing residents to fund the additional city infrastructure needed for the project. As taxes go up, a city becomes more desperate and the cycle grows in magnitude.
The use of a million dollars of Quality Growth Fund and up to 15 years of lost property tax revenues from TIF probably will not be the final tally for North Platte taxpayers. The company in question is well-known for accessing Nebraska’s Advantage Act, and if it does the city will lose thousands more in sales tax receipts on the project’s materials cost.
The above scenario is why next year I will hesitate to support the present form of LB720, Nebraska’s newly proposed economic development plan. The new legislation has been given the name the “ImagiNE Nebraska Act” and would replace the existing “Advantage Act”.
Last year, the Advantage Act refunded $152 million in sales and corporate income taxes as incentives for business growth in Nebraska. You would think that the purpose of an economic development plan would be long-term job growth, but in fact, sales tax refunds amounted to approximately $109 million and income tax refunds amounted to the remaining $43 million. Only 2,489 new jobs were reportedly created from the taxpayer investment. I have a philosophical distaste for sales tax abatements on products not produced in Nebraska. For example, windmills for wind energy projects have received millions in sales tax refunds on materials built in other states that created no jobs in Nebraska.
I am also concerned with language added to LB720 that for an unexplained reason added new construction for commercial banks as qualifying for incentives. With the exception of businesses doing 75% of their sales outside of Nebraska, no other retail businesses qualify. Why do banks?
Politics, political donations and lobbyists play a part in economic incentives, making their cost higher than necessary. The reality is that incentives of some sort have become part of our state’s tax policy. I will vote for a version of LB720, but first I must be assured that property tax relief is achieved with the passage of a version of LB289. I firmly believe property tax relief for the average citizen will do more for our economy than all the tax giveaways combined.
Contact Sen. Mike Groene: firstname.lastname@example.org or 402-471-2729.
Thanks to those who attended the McCook Natural Resource Committee hearing on the N-CORPE land ownership issue. The testimony came from successful agri-business people, attorneys and from Lincoln County officials. The Natural Resources Committee heard the truth; it was convincing, pertinent and backed by fact.
N-CORPE’s public land ownership is a direct assault on a highly-valued Nebraska governing tenant: “LOCAL CONTROL” on issues of property taxation and land use. They also heard a very weak defense by NRD employees as to why taxpayers need to own 19,500 acres of land for a groundwater to river augmentation project that in a physical aspect is unrelated to how much land is involved.
Their argument for land ownership is based on old English Common Law, which is based on tradition and related court cases. Common law goes back to the days when water for domestic and livestock use primarily came from surface water streams. It was commonly accepted that you could not dam up a stream and deny a neighbor his share of the stream water as it flowed through his property. Nebraska’s common law on water, as defined by the Nebraska Supreme Court is, “your use of groundwater is limited to the beneficial use needed on the ownership of overlying land.”
Nebraska’s Constitution of course takes precedent over all laws: legislative, court case or common. It states “The use of the water of every natural stream within the State of Nebraska is hereby dedicated to the people of the state for beneficial purposes.”
The Nebraska Supreme Court has repeatedly stressed that when the Legislature enacts a statute that is contrary to any common law, the new statute takes precedent, common law and past court cases are no longer relevant. The Nebraska Legislature has in the past created statutes that have made an exception to common law. In 1963 they created the Municipal and Rural Domestic Groundwater Transfer Permit Act, which defined the Constitution’s beneficial use clause for public water projects as other than the common laws use on the overlying land. It is the reason the City of North Platte does not have to own 19,500 acres of land surrounding their water wells in order to supply you drinking water. The statute was upheld in the 1985, “Sorensen vs. Lower Niobrara NRD” case in which the Court clearly stated that NRD’s ownership of half acre well sites to supply domestic water to rural citizens was sufficient for the public purpose and that, “in permitting transfer of groundwater from the site of its extraction the act has removed use on overlying land as an index for the ‘reasonable and beneficial’ required by common law.”
How much water NCORPE uses can easily be protected from lawsuit by deed reservations on the land sales and by the local NRD’s ability to set allocations on the amount of water used.
Two recent Supreme Court cases concerning NCORPE make it clear that the augmentation project is a public purpose similar to public domestic use water projects. In both of the cases the Court made references to the Sorensen Case by stating in Estermann, “Since the Nebraska common law of groundwater permitted use of the water only on the overlying land, legislative action was necessary to allow for transfers off the overlying land for as pressing a need as supplying urban water users.” In the Dundy County Case the Court referred back to language in the Sorensen case where concerning a public use a half-acre of land ownership over a well-site was sufficient to satisfy the common law’s requirement of land ownership over the source of the groundwater.
It is a complicated issue, but as you can see we have done our homework. At the hearing Thursday when NRD representatives were asked by senators about the ability of the Legislature to rectify the competing interest in this matter, they had no answers. I believe that a majority of senators on the Natural Resources Committee now see through the scare tactics and misinformation presented by the landowner proponents. I would not continue to be in Lincoln if I did not believe that commonsense and justice can prevail. It is time for legislative action.
Contact Sen. Mike Groene: email@example.com or 402-471-2729.
As the arid West was settled, Mark Twain is attributed as saying, “Whiskey is for drinkin’ but water is for fightin’.” Reality is, more wars and legal disputes have been fought over ownership of land.
Thus you have a description of the fight Lincoln County is in over the NRD groundwater to river augmentation project, N-CORPE, which sits on 19,500 acres (over 30 square miles) in the middle of the county. This fight is over water and land ownership, making the skirmish a little more intense.
Of the four NRDs involved in the project, the citizens in the Twin Platte (TPNRD) and the Middle Republican (MRNRD) have the most at stake; the land in the project lies in their districts. They have to be accountable to the State of Nebraska for the groundwater under the project and their irrigated farmers have an additional tax burden to pay a share of the project’s cost. The other two NRDs, the Lower Republican (LRNRD) and Upper Republican (URNRD), have only to pay their share of cost. So you see the injustice, citizens of Lincoln County’s taxing entities lost the tax revenues on 15,800 irrigated acres and the local economy lost production inputs associated with those acres. Plus, the county’s two NRDs have to account for the groundwater consumed by the project. Meanwhile, the only burden the citizens in the URNRD and LRNRD have is the occupation tax paid by their irrigated farmers to cover a share of the project’s cost.
The injustice does not end there: The management of N-CORPE, in order to expand the project, is pursuing buying more irrigated land to take off the tax rolls, and they are seeking contracts with wind and solar energy companies to install windmills on Lincoln County land against the will of the county’s residents.
If you weren’t already aware, you now know why I have passionately introduced legislation to address the issue. In Lincoln County, we have broad shoulders and are willing to bail out the State of Nebraska and our neighbors with our groundwater, but we are a little irritated that the NRD’s statewide bureaucratic establishment has not worked with us to return control of our land back to us. I must clarify that the MRNRD board and management has bravely bucked the bureaucratic pressure and has stood with us in this fight.
The legislation I plan to offer next year is simple: “If real property was acquired to develop and operate an augmentation project for streamflow enhancement, the owner or owners of such project may later sell such real property and continue to pump ground water, subject to the provisions of section 46-739, in the amount necessary for augmentation purposes without regard to land area or acres owned.”
Since this fight began five years ago, there have been two Nebraska Supreme Court cases that have helped clarify the land ownership issue. Adding those to existing court opinions and working within existing law, we crafted our legislation. We have vetted our language with State Attorney General Doug Peterson’s office and the Nebraska Department of Natural Resources (DNR). They have both indicated that the language does no harm to the state’s interest in complying with the Republican and Platte River agreements.
The benefits of our legislation are manyfold. Selling the land not directly over the wells and paying down the bonded indebtedness with the proceeds will greatly reduce the tax burden on our irrigated farmers. It will protect the State of Nebraska’s interest and that of the augmentation project by decoupling the amount of groundwater used by the project from Nebraska common law’s tie to beneficial use on the overlying land. It protects the local control of groundwater management by the MRNRD and TPNRD. Plus, and most importantly, private ownership will lead to better land management and return the land’s future to local government control.
Over the last five years, we have refined the language of the bill; disproved the scare tactics of the opposition; and worked with the Attorney General’s office, the DNR and members of the Legislature’s Natural Resources Committee to get it right. It’s time to fix the injustice in Lincoln County.
Contact Sen. Mike Groene: firstname.lastname@example.org or 402-471-2729.
A new school year begins again. Every year the Legislature enacts statutes making changes to how schools function, thus affecting the overall experience of students. As a member of the Education Committee, I have taken note of the seeming absence of average parents and citizens in the process. The testimony at our bill hearings is usually from lobbyists representing the interests of school administrators and teachers concerned about the operation of public education. We also hear from special interest groups who want to latch on to some of the tax dollars intended for public education. Occasionally, we will get testimony from the higher education establishment coming down from their ivory towers bearing their newest theories and studies. As parents, we have all experienced the latest trends, from outcome-based education to “let’s give them a computer so they don’t have to think” and everything in between. Parents who have been successful at getting their kids through school understand that what worked a century ago still works today. It is evident that having children memorize the alphabet, teaching them phonics and grammar, and instilling the love of reading in them opens their doorway to all of the world’s knowledge. If you were lucky, your student attended a school where the administration allowed the teachers to follow that same proven route and, in the process, a productive citizen emerged knowing how to think instead of what to think. But still we seek the theoretical method that will achieve an easier path to the same outcome without the necessity of instilling the attributes of hard work and discipline in a student that common sense tells us are requirements to succeed.
New statutes affecting K-12 public education:
LB 390, addressing school resource officers, police or security guards in our schools. Schools are required to create a memorandum of understanding with the law enforcement or security agency providing the officer. The memorandum outlines necessary training, procedures as to when a student is referred to law enforcement for prosecution for a crime, record keeping, understanding behavior due to a student’s special needs and notifying a parent when their child is involved. Overall, I supported the legislation’s goal to have everyone – including administration, teachers, parents, local police and the community as a whole – understand what is expected of a police officer walking the halls of our schools. I did have some concerns about the social engineering aspects within the bill.
LB 399 updates the American civics and social studies requirements that school districts must teach in our schools. Most of you probably did not realize that school boards must have an American Civics subcommittee comprised of three members whose duty each school year is to review and approve the school’s social studies curriculum to ensure it follows the statutory requirements in state law. In the past, it was mostly ignored by school districts. At best, a committee was created, but never actually met. A new requirement in LB 399 directs the committee to hold at least two public meetings a year and to accept public comment, ensure that curriculum approved by the committee is made readily accessible to the public and, for the first time, assure that an assessment is created to measure a student’s mastery of the social studies standards.
Presently, the Nebraska Department of Education is updating their social studies standards to reflect state statute. But in all endeavors in education, social engineering rears its ugly head, and there are those advocating a distorted view of history with the goal of emphasizing a diverse array of public figures and events in lieu of the greater relevance of historical accomplishment. Public comment on the standards is accepted. You may review them and comment to the State Education Board if you have concerns.
LB 675 includes the state’s budgetary requirement for public school funding. In the past, the state has reduced school aid funding in lieu of other spending “priorities” thus shifting the cost of public schools to the property taxpayer. This biennium budget, the Education Committee resisted attempts to cut and kept them to a minimum. State aid increased by $65 million this year to $1.065 billion.
Contact Sen. Mike Groene: email@example.com or 402-471-2729.
During the 106th Legislature’s First Session, 739 bills were introduced by the 49 senators. Senator Wayne topped the list with 48 and Senator Moser (a very good, pragmatic freshman senator) had the least with one. I introduced 17 total, five involving my duty as Chairman of the Education Committee. Five became law and two sit on General File.
234 bills were passed. Of those, 26 had an Appropriations bill attached with an estimated $7 million cost. Three were successfully vetoed by the Governor, leaving a total of 231 new laws that will take effect by September 1st.
Another 86 bills are on General File awaiting the start of next year’s floor debate. Included is our LB 148, a requirement for a separate budget hearing by local governments, and LB 147, our student/teacher classroom protection act. 382 introduced bills are still in committee, and if history repeats itself, another 600 or more new bills will be introduced in January.
Are too many bills introduced each year? I would say, yes. In the past, legislative rules limited Senators to ten bills; that rule was changed in 1983. I believe a return to such a limit would cause bills with minor changes to present law to be consolidated into a committee bill. An example of a bill with minor changes to existing law is LB 75, which changed terms of members of the Grape and Winery Board. I frankly did not know that such a board existed, but to those involved in that industry, it is of importance.
Needed legislation did pass last year, including:
LB 399, replacing the old School Americanism law, which was being ignored by schools due to its inability to be enforced and its antiquated language. The law has been retitled School American Civics requirements. Amongst its many attributes, schools must now include financial literacy in their curriculum, teach the benefits and advantages of representative government, and teach our children the dangers and fallacies of forms of government that restrict individual freedoms or possess antidemocratic ideals. Schools now must assess a student’s knowledge of American civics and report it to parents. An enforcement provision of the standards has been assigned to the Department of Education. With the ignorance shown by elected officials across America and by the citizens who elected them, it is critical we demand our children understand who we are as Americans and how we got to this point in history.
Another important bill was LB 209, which requires a medical practitioner inform a woman of their ability to reverse the effects of the abortion pill if they were to change their minds.
LB 65 will lower the cost of business by eliminating an electrical regulation. Electricians will now be able to contract with a boring company to install underground electrical conduit in lieu of having to own their own horizontal boring equipment. Excessive regulations cost the consumer money. Any time we can eliminate unnecessary regulations the consumer wins.
Some very burdensome legislation did pass:
LB 405 adopted the newest version of the International Energy Conservation Code (IECC), making Nebraska only the second state to do so. It creates excessive residential home building codes. A report issued with the support of the U.S. Department of Energy estimates that the new codes will add $3,000 to the cost of a new home. In the face of claims that workforce housing is already beyond a working family’s ability to purchase, I believe LB 405 is contrary to the wishes of Nebraskans.
Nebraska already has the most local government entities, from 93 county courthouses all the way down to cemetery boards. Yet this year we passed LB 492 to potentially create a new government entity, a Public Transit Authority, which has an elected board with its own taxing authority. Citizens living in large municipal areas have the potential of a 20% increase in their municipal property tax burden.
Never underestimate the ability of elected officials to tell you one thing and do the other. LB 492 is a perfect example of where voters are demanding one thing, property tax relief, and instead witness their elected officials doing the exact opposite.
Contact Sen. Mike Groene: firstname.lastname@example.org or 402-471-2729
Note: The original version of this column was edited to correct a bill number and the name of the International Code.
I strive to base the decisions and positions I take as your State Senator on truth and facts. For instance, you are well aware of my opposition to the statewide misuse of Tax Increment Financing (TIF). The state constitutional intent of the practice is clear. It is to be used for the betterment of the entire community by shifting planned new construction from the edge of town to blighted and substandard areas where the removal, improvement or replacement of older buildings, along with improvement to aged government infrastructure, aids the overall outlook of a community.
North Platte has done a couple of proper TIF projects: the original Pro Printing and the new Hobby Lobby are two that come to mind. A project to renovate the Pawnee Hotel would be another proper use of the program.
TIF was never intended to be driven by economic development concerns, but done correctly, TIF can become a catalyst to foster economic growth.
Examining the Community Redevelopment Authority’s (CRA) proposed Pacific Place Apartments TIF, I fail to see how the project would improve the overall economic or infrastructural outlook of the town. Between the time of the 2010 Census and the Census Bureau’s 2018 estimates, North Platte’s population has declined by 919 and Lincoln County as a whole by 1,103. Contrary to the housing study commissioned by the Development Corporation (DEVCO), which estimates a 315 rental unit shortage, the 2010 Census found North Platte had 890 vacant housing units. By 2018, that number is estimated to have grown to 972. To back up the Census numbers, I checked with local rental property managers. The consensus was their vacancy rates are above what is preferred and there is no shortage of availability of free market rental housing for an adequately paid workforce.
I heard comments that North Platte may have a shortage of Federal Section 8 and Nebraska Section 42 low-income housing. Section 42 housing automatically qualifies for large property tax reductions, in some cases over 70% and therefore there is no need for TIF. A shortage of low-income housing is understandable since local economic development assistance efforts have lately emphasized the hotel industry, where the majority of jobs are low-paying. North Platte’s location is a natural magnet for that industry. It does support the sales tax base and the restaurant trade, but a focus on bringing high-paying blue-collar manufacturing and service jobs to the area would do more to eliminate the need for low-income housing. Pacific Place Apartments is not registered as a low-income housing complex; it competes in an already crowded free market rental industry.
Questions that come to mind to be considered by citizens are:
What am I doing in Lincoln to help Lincoln County grow?
First, I am working with fellow Revenue Committee members to craft LB 289 as an answer to the very issue the Pacific Place developer implied: property taxes in Nebraska have become so burdensome that it is detrimental to the success of business. I am told that, high taxes overall is the number one reason why middle class workers and retirees move away from the North Platte area.
Second, we are attempting to influence the terms in Nebraska’s new economic development program, LB 720, to assure that rural Nebraska is guaranteed an equitable share of the benefit.
It is interesting to watch some local efforts, seemingly done haphazardly, with no concern that those efforts may add to an already high property tax burden or not seeing any acknowledgment of the negative overall effect those high taxes have on economic growth.
Contact Sen. Mike Groene: email@example.com or 402-471-2729.
If Nebraska’s governor were a corporate CEO and the Legislature were the corporation’s board of directors, labeling the Revenue Committee’s Legislative Bill 289 as a price increase to customers (sales taxes) and a major spending jump in a service (public education), would be accurate.
But government is not a corporation. State government doesn’t compete with local government and vice versa; the interest of citizens shouldn’t be subservient to the politics of government.
Thoughtful Nebraskans understand that LB 289 is an effort to rebalance the overall government budget and is not a tax increase. The bill addresses our embarrassing eighth-highest national property tax rating by correcting its over-reliance on property taxes to fund public education. Nebraskans do support public education; at $12,379 per student, we rank 17th nationally. The inequity lies in the fact that we rank 46th in state support (income and sales taxes); meanwhile, support by overburdened property taxpayers is third highest.
Historically, governors and legislatures have controlled state spending by shifting their constitutional duty to fund public education to local property taxpayers. No matter who the property owner is — middle-class homeowners, retirees, small businesses or those in production agriculture — when asked what tax is the most regressive and worrisome to pay, the answer is overwhelmingly property taxes.
At the forefront of LB 289 is property tax relief. On average, property owners would receive an immediate 10-15% reduction in property taxes, plus $115 million will remain in the Property Tax Credit Fund to be disbursed to them. Mechanisms in LB 289 would guarantee tax relief through fairness in school funding; a per-student foundation aid is created based on 25% of state tax revenues. Including foundation aid, no school district would receive less than a third of its funding needs from state aid (213 currently do not). The maximum general fund levy would be lowered from $1.05 to 96 cent and local property valuations would decrease 10% within the state-aid school funding formula. Finally, large property valuation increases would no longer drive up school taxes because LB 289 limits growth of local property tax revenue for schools to new construction growth and CPI-calculated inflation, thus removing future effects of unreasonable valuation increases.
LB 289 controls the growth of spending by eliminating factors that encourage it. To address the needs of 244 diverse school districts varying in enrollment from 60 to 51,000 students, Nebraska’s school funding formula is, by necessity, complicated. Long-term cost savings are achieved by removing from the formula an unwarranted funding adjustment for per-student cost that only the largest 19 districts receive. Resetting unused budget authority accessed by smaller schools would also slow down spending, and any growth in school needs over and above increases in enrollment, poverty, language barriers and other factors would be limited to the inflation rate in lieu of the current 2.5% arbitrary factor. These changes will assure taxpayers no less than a dollar-for-dollar decrease in their property taxes from the new sales taxes collected.
Nebraskans are demanding needed property tax relief along with reliable, predictable and equitable school funding. The answer is achieved by addressing the unbalanced three legs of our income, sales and property tax stool. Presently, Nebraskan’s tax burden is split 44% property, 30% income and 26% sales. Raising the sales tax levy by a half-cent and plugging some of the obvious exemption holes in our tax-collection bucket can level the stool’s legs and achieve appreciable property tax relief.
We can’t afford the taxation path we are on. This critical public policy debate shouldn’t be decided by simplistic and misleading political one-liners such as “the largest tax increase in Nebraska history.” If LB 289 fails, candidates for state office will have to answer some hard political questions: Should voters angered by legislative inaction support a 35% property tax credit initiative on the 2020 ballot? When offered, did they support the good state policy and long-term property tax relief of LB 289? And if they did, why isn’t there a recorded vote, to prove it?
After reading the Telegraph’s editorial last Sunday, it is quite obvious the writer does not have a clue as to the workings of the unicameral process. Since the writer deemed it appropriate to lecture me on issues of government, I feel it necessary to correct the record.
Do I work with other senators? Below are a few recent instances.
LB160 – Senator Quick’s inclusion of early childhood care facilities as a use of (LB840) Quality Growth Funds. We helped get the bill passed by adding an amendment loosening the restrictions on what facilities qualified.
LB6 – Senator Blood’s bill to change residential provisions relating to spouses and children of military personnel stationed in Nebraska for in-state tuition purposes when the individual is reassigned to another post outside of Nebraska. We worked together to clean up the language to better express Senator Blood’s intent and to ease residency qualifications for military families. The bill is out of the Education Committee and is now a Speaker Priority bill.
LB619 – Senator Kolowski’s bill prohibiting denial of coverage for mental health services delivered in a school. We worked with him on an amendment to make clear that the covered provider could only be a private practice practitioner and not a school or ESU employee. The bill advanced to final reading.
LB147 – Our bill changing the Student Discipline Act to provide for use of necessary physical contact by a teacher or administrator to protect individuals in the classroom, give teachers the ability to have a disruptive student removed from their classroom, and trigger a mandatory conference between the teacher, parent and administrator concerning the student’s behavior. We have spent hours in negotiations with the NSEA, the lobby for people with disabilities, and senators on the Education Committee to craft a good bill that we plan to yet get out of committee.
Property taxes: As chairman of Education and a member of the Revenue Committee, I have spent long hours, as have other concerned senators, attempting to craft the language of the bill that Revenue Committee Chair Linehan plans to finalize by April 15th.
N-CORPE: We are working with the Attorney General, the Department of Natural Resources, the Governor’s Office and senators on the Natural Resources Committee to finalize amendment language. Not an easy task when you are fighting local misinformation by N-CORPE proponents.
As to floor debate over Senator Wayne’s LR14CA, I stand by my opposition to the bill. Treating our state’s constitution as if it were a place to create statute is not the proper way to address a moving target such as redevelopment law. No developer is going to create a redevelopment project in an area already dense with older houses and commercial properties in North Platte or north Omaha, where people already work and live. What is needed in those areas, as I have shared with Senator Wayne, is to create a way that small contractors, landlords, or homeowners can receive TIF for truly redeveloping a single home in a blighted and substandard area, without prohibitive legal and bonding costs eroding their proceeds from TIF. Senators Wayne and Chambers are well aware that when it comes to the misuse of TIF as an economic development tool instead of its intended purpose addressing redeveloping truly blighted and substandard areas, we are on the same side of the issue.
Don’t let the political antics on the legislative floor fool you, as it apparently has the editorial writer. Sometimes people of principle, as Senator Wayne, Senator Chambers, and I are, need to reestablish where our boundaries lie. At the end of the day, Senator Wayne and I will continue to work together on TIF, property taxes, and education legislation, as we have in the past with the clarification of TIF statutes in passage of LB874.
The editorial writer’s concern about rural versus urban cooperation is foolishness. What has turned Nebraska into a high tax, over-regulated state is the willingness of past senators to nod and agree to vote for “let’s get along” legislation. Respect for each other’s priorities is what will accomplish the task at hand, and respect was built last week during the floor-rumble on LR14CA.
Sorry about not writing more columns, but as you can see, I have been busy.
Contact Sen. Mike Groene: firstname.lastname@example.org or 402-471-2729.
This winter, as I contemplated how to address our burdensome property tax issue, I took into consideration that expanding our property tax base should be an option. Thus, with the passage of Medicaid expansion in November, I wondered why so-called nonprofit hospitals needed to be exempted from property taxes. Our state Constitution states, “The Legislature by general law may classify and exempt from taxation…property owned and used exclusively for educational, religious, charitable, or cemetery purposes, when such property is not owned or used for financial gain or profit.”
There are 104 hospitals in Nebraska. Eight are for-profit, tax-paying facilities (Kearney Regional Medical Center, for example), 37 are tax-exempt, government-owned and operated (Gothenburg, Callaway and Imperial are examples) and the remaining 59 are classified as nonprofits (Great Plains Health for example).
Does anyone believe that their mission fits under the 100% “exclusively charitable” classification in the Constitution? I believe that answer to be No, especially with the passage of Medicaid expansion and the expected infusion of over $600 million in Medicaid, most of which will end up in hospital coffers. In most cases, those who received charitable care in the past will now be covered by Medicaid. Considering that in 2017 Nebraska hospitals only gave $131 million in charitable care, the $600 million expansion of Medicaid adds up to a nice profit.
A recent study by the Urban Institute shows that hospitals in Medicaid expansion states have more revenue, lower uncompensated care cost (charity?), and fatter operating margins. Margins improved by 2.5%. Charities normally do not have profit margins.
Another reason why non-government-owned hospitals should pay taxes is the recent announcement of CHI Health system’s recent purchase of the naming rights of the former CenturyLink Center in Omaha for $23.6 million. In addition to the naming rights, CHI Health will get to use one corporate suite and four club level seats for all events at the arena. Why does a nonprofit need to advertise? Who is CHI competing with in Omaha, the government-run University of Nebraska Medical Center?
Hospitals, like most profitable businesses, pay high compensation to administrators and other highly educated employees. This is unlike the compensation offered to employees and volunteers at what one would consider a true charity like a soup kitchen or a public health clinic.
What better way for a hospital to support a local community than to become a taxpaying member of the community, helping to support our schools, public safety and maintaining the community’s infrastructure? If a hospital is going to operate like a for-profit corporation, I believe they need to pay taxes like one! My bill to address this issue, LB529, was heard in the Revenue Committee last Thursday.
LB63, our bill to make positive changes to the Mutual Finance Organizations and allow for local property tax control by rural fire districts, passed Final Reading last Friday by a 45-0 vote.
LB65, our bill to modernize the State Electrical Act thus allowing underground boring contractors to install electrical conduit without being a licensed electrician and instead only being supervised by an election, passed Final Reading last Friday by a 44-0 vote with one present not voting.
LB148, our Open Meetings Bill concerning local government budget hearings, requiring meeting announcements in newspapers, and the necessity for the NRDs’ interlocal agreement-N-CORPE to have a budget and hearing, came out of the Government, Military and Veterans Affairs Committee.
LB 606, our bill to define in law the ability of NRDs to sell land without jeopardizing the augmentation project, will be heard in the Natural Resources Committee next Wednesday, March 13. We would appreciate emails of support. Please send them by 5:00 pm on Tuesday to the Committee.
Property tax relief is still a top priority for the Legislature this year. The Revenue Committee, led by Senator Linehan and of which I am a member, is working on a package to reduce property taxes and find a solution to fund it.
I regret my columns have not been available weekly; time management is at a premium this session. I am not one to report what should be done, but instead what has been accomplished.
Contact Sen. Mike Groene: email@example.com or 402-471-2729.
LB695, which is my Property Tax Relief/TEEOSA Stabilization bill, was heard in the Education Committee on Tuesday. The bill is a result of the TEEOSA Study Group we formed last summer. Below is an abbreviated version of my opening remarks.
“LB695 will provide long-term property tax relief for all Nebraskans, stabilize the TEEOSA formula’s proportional funding of state income, sales and local property taxes, plus make the formula reflect the reality of real-life economic factors.
LB695 addresses Nebraska’s overburdensome reliance on property taxes to fund our public schools. I have come to an understanding that the TEEOSA formula has flaws, but it still remains the best option we have to provide ‘free instruction in the common schools of this state’ for children in our 244 school districts with varying student populations from 60 to 51,000.
A) Foundation Aid: (property tax relief for Wallace, Hershey, Brady, Maxwell, Sutherland) Establishes a stabilizing factor in the amount of state aid given to each school district by using a base per student funding amount. LB695 proposes to dedicate 25% of the State’s prior year total income taxes (both individual and corporate) plus sales tax revenues to be distributed equally to school districts on a per K-12 student basis. In 2018, total state income and sales tax revenues were $4.28 billion. There are 307,753 K-12 students enrolled statewide in our public schools, which would equate to a foundation aid factor of $3,474.40 per student. Creating a reliable state aid funding source through foundation aid will give long-term stable property tax relief to taxpayers in the 175 districts that receive no equalization aid, as well as those hovering towards receiving none. Foundation aid will replace the income tax rebate.
B) Property Tax Relief for Equalized Districts (North Platte): All districts will receive foundation aid as a resource. Districts lacking enough local resources to fund their schools will still receive equalization aid. LB695 proposes lowering the max levy from 1.05 to .95; therefore, the local effort rate used in the formula will be lowered from 1.00 to .90, giving those property taxpayers a 10% reduction in their school general fund property taxes. State equalization aid will fill in the created funding gap.
C) Local Property Valuation Distortion: LB695 proposes to slow growth of the ‘local effort yield’ from property taxes by creating a base year yield (.90 LER) in the 2020/21 school year. In subsequent school years, growth will be limited by new construction growth and the CPI-calculated inflation rate. In the future, this provision will stop the funding shift to property taxes by alleviating the distorting effects of unreasonable valuation increases on the taxes paid by local property owners.
D) Growth of School Needs: LB695 uses factual economic data to adjust needs growth. Instead of the present arbitrary base limitation that is used as the 2.5% allowable growth rate factor, in the future we will use the most recent available year’s CPI-calculated inflation rate. The inflation rate used for the allowable growth rate will not be allowed to go below 0% or above 2.5%.
E) Net Option Funding: With the enactment of LB695, the foundation aid ($3,474.40) follows the option student; therefore, because the net option school district is now only lacking the property taxes paid by the students’ parents, the correct thing to do is for the state to assist the school with an amount equal to the statewide average property tax cost. The average general fund property tax expenditure per student would be $6.194.51 for the 2019/20 school year.
LB695 will balance over time the ratio between state and local funding. State revenues have had a healthy annual 4.8% increase over the last 38 years. As those revenues grow, so will the state’s 25% contribution to foundation aid, causing the reliance on property taxes to continue to ease over time.”
Thursday, property tax relief bills from Senators Friesen (LB497) and Briese (LB314), and my LB677 will have hearings in the Revenue Committee. I believe to achieve property tax relief, it will be necessary to join forces and create one bill out of many. To quote President Lincoln, “A house divided against itself, cannot stand”.
Contact Sen. Mike Groene: firstname.lastname@example.org or 402-471-2729.
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