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Every session of the legislature I introduce a resolution. Last session it was called LR13CA. It proposes a constitutional amendment to place a limit on how much property taxes can be used to fund public schools.
Article VII, Section 1 of the Nebraska constitution reads; “The Legislature shall provide for the free instruction in the common schools of this state of all persons between the ages of five and twenty-one years.”
What I propose inserts new language that reads; No more than thirty-three percent of the funding for such free instruction in the common schools shall come from property taxes. The legislature can place a proposed constitutional amendment on the ballot with 30 votes.
Nationally, about forty percent of public schools are funded with property taxes. In Nebraska that average is about sixty percent. In my district in western Nebraska, over seventy percent of the funding for public schools comes from property taxes. If this proposed amendment was ratified by the people at the ballot box, and all the 244 school districts in Nebraska received the same funding they had before, an additional $700 million dollars would have to be appropriated to make up the difference. This is why this resolution is never voted out of the committee. Spending cuts elsewhere in the budget would be needed to accomplish that kind of appropriation.
When there is no limit placed on how much a tax can be used by government, how can anyone be surprised when that tax bill gets bigger every year?
Meanwhile, the legislature did pass some good bills the last couple of sessions that do lower property taxes. Unfortunately, the Nebraska Department of Revenue reports that about 40% of eligible tax payers failed to claim the refund on their state income tax form. For instance, the owner of a $250,000 home in Lincoln could have claimed $1,137 in refunds this year from the income tax credit and another state property tax relief effort. According to the Governor, when 2022 income taxes are due next April, Nebraskans could realize a 30% reduction in their property taxes through various income tax credits. It provides these credits on property taxes paid to support K-12 schools and, beginning on next year’s taxes, on property taxes paid for community colleges too.
In the 2021 legislative session, LB644 was passed to add transparency and accountability to Nebraska’s property tax process. Local units of government with property tax authority (schools, counties, towns, etc) are required by this law to have a “truth in taxation” public hearing if tax collections will increase more than 2% of real growth. The hearings have to be held after 6:00pm between 17-23 September. Postcards advising citizens of these hearings are in the mail now. Any planned increase in taxation from the previous tax year requires the words “NOTICE OF PROPOSED TAX INCREASE” on the post card.
Property tax relief through income tax credits is not as simple and straight forward as my constitutional amendment idea. Not taking the money from the citizens in the first place would not require a complicated refund scheme like this. Regardless, Nebraskans are leaving money on the table that is rightfully theirs. I encourage everyone who pays property taxes to attend their local “truth in taxation” hearing, and file an amended 2021 income tax return if they missed out on any property tax credits.