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LB829 is the number assigned to my, Sen. Steve Erdman’s, property tax relief bill. LB829 will allow tax payers to get a 50 percent credit or refund on that portion of their property tax bill which goes to fund public education when they file their Nebraska state income taxes. For most taxpayers, LB829 will result in a 30 percent reduction in their property taxes.
LB829 is necessary because property taxes in Nebraska have been running out of control. According to the Department of Numbers, Nebraska’s real median household income remained stagnant near $57,000 between the years of 2005-2016. However, the per capita property tax burden rose from $1,150 in 2004 to $1,550 in 2011. That’s a difference of $400 or 25 percent within a time span of only seven years while household incomes remained steady. This year the median property tax bill in Nebraska is $2,164.
In recent years rural areas of our State have been hit particularly hard. For example, I live in Morrill County and according to the Nebraska Department of Property Assessment & Taxation the total amount of property taxes levied in Morrill County in 2006 was $7,390,027, but by 2016 that number had climbed to $17,569,558. That’s an average increase of more than one million dollars per year in a county with only 5,042 residents, according to the 2010 Census. So, property taxes have been rising at an alarming rate while median household incomes have remained stagnant.
Recently, an editorial appeared in the Omaha World Herald challenging the constitutionality of LB829. The editorial criticized my bill by claiming that the Nebraska Constitution gives no authority to the Legislature “to commute taxes or release taxpayers from their duty to pay taxes.” But, this criticism of LB829 is wrong.
The proposition that the Legislature lacks the authority to release taxpayers from their duty to pay taxes ignores what LB829 actually says. LB829 does not release taxpayers from paying their property taxes; all taxpayers will pay their property taxes the same as before. What LB829 does, however, is offer a credit or a refund to taxpayers on a portion of their property taxes which goes to fund public education. So, I welcome my opposition to challenge my bill in court.
The Legislature has the power to change the way people get taxed. If the assertion made by these editors of the Omaha World Herald was ever deemed to be true, then wouldn’t the TIF laws all be declared unconstitutional? Furthermore, if this criticism of my bill was ever sustained by the courts, then there would be no recourse for the Legislature to ever get rid of a bad tax.
Contrary to the editorial, I believe the Legislature has the authority to correct these kinds of wrongs. I also believe that the citizens of our State form our State’s Second Legislative House. As our State’s Second Legislative House, the citizens have the right to decide for themselves how they should get taxed through a provision made in the Nebraska State Constitution known as the citizen led initiative. This year you will have the opportunity to sign our petition to put this measure on the November ballot.
The editorial in the Omaha World Herald went on to challenge LB829 again, but this time it did so on the grounds of violating “the Constitution’s equal protection and due process provisions.” The editorial criticized LB829 because only those who file a Nebraska State income tax return would be able to benefit from the income tax credit or refund offered by the bill. But this criticism, too, is wrong.
This second criticism lodged against LB829 ignores the fact that all laws discriminate to some degree. For instance, speed limit laws discriminate against speeders as well as against those who don’t own automobiles. Just as our speed limit laws do not obligate the State to provide motorists with vehicles, so also my tax relief bill is not obligated to provide property tax relief for those who do not file a Nebraska State income tax return.
The truth about the 14th Amendment is that the Equal Protection Clause simply requires lawmakers to provide a good reason or a rationale for the law being proposed. Consequently, the justification I am proposing for LB829 is that property taxes have been rising at a much faster pace than average household incomes. The burden of continuously rising property taxes has now become unbearable for far too many property owners, and I believe that is ample justification for the Legislature to pass my bill.
Here is a link to the bill: LB 829
One bill I believe Nebraska needs is LB611. LB611 is a carry-over bill from last year. Last year the bill advanced out of the Appropriations Committee, where it also became the committee’s priority bill. The bill currently sits on General File.
LB611 would require annual reporting of federal funds received by state agencies participating in the State’s budgeting process. The report would require every State agency to create two operating plans; the first would go into effect once federal receipts drop by 10 percent and the second would be enacted once they drop by 25 percent. This kind of reporting is necessary so that the executive and legislative branches of the State government would be prepared to act in the best interests of Nebraskans should federal funding ever be reduced.
Because our country’s national debt has now surpassed $20,600,000,000, I believe this is now the next fiscally responsible step for our State to take. Because our national debt now surpasses our gross GDP, there are no longer any guarantees about the future status of federal grant monies.
Federal grants almost always come with strings attached. Whenever the federal government turns off the money spigot, the states are left holding the hose. So, federal grants put the State at the mercy of the federal government, where we are tied to their inconsistent whims.
Federal grants come with the potential to put the State into a spending crisis. In addition, states remain bound by the unintended consequences and extra costs associated with accepting federal dollars.
Besides suddenly turning off the money spigot, federal grants often incentivize unnecessary spending at the state and local level. Because some people view these federal grants as “free” money, it encourages impulsive and unchecked spending. Making matters worse, states are often unable to track how these federal dollars get spent.
LB611 would provide state officials with the opportunity to see where all of their federal grant monies go. LB611 would mandate an audit of all federal funds in the State, including a report of all the strings which are attached to these federal grants.
LB611 would also allow state officials to measure the impact of a future spending crisis. The bill would require a risk assessment to identify potential vulnerabilities so that state officials may make better decisions and plans about what to do in the event of a reduction in federal funds.
More than 30 percent of Nebraska’s budget is currently being funded by federal grants. 91 percent of Nebraska’s Labor Department, for example, is funded by federal grants, while 85 percent of Nebraska’s military spending comes from federal dollars. Because I sit on the HHS committee and the Education committee, it is important to report that $2.7 billion of the Department of Health and Human Services comes from federal grants, and $580 million of the University of Nebraska’s budget comes from federal grants.
The bottom line is that LB611 will help to ensure that Nebraska would be protected against Washington’s next federal funding crisis.
Happy New Year and welcome to 2018! The second session of the 105th Nebraska Legislature will commence on January 3. So, this week I want to offer an update on some of the bills I have been working on and will introduce this year.
The first bill I will introduce will be the property tax relief bill I promised to introduce in a press conference I held last May after the closing of the first session of the 105th Nebraska Legislature. My Property Tax Relief Act will give Nebraska taxpayers a 30% reduction in their property taxes. According to The Hightower Report, Nebraska now ranks as the fourth highest state in the union for property taxes, and we are second only to Illinois when it comes to combined taxes. Therefore, the best action the Nebraska Legislature can bring to the State this year is some much needed property tax relief. To ensure that this measure appears on your ballot in November we will begin collecting signatures for a citizen led initiative starting this year.
The second bill I will introduce is another agricultural land valuation reform bill. Last year I introduced LB 602, which stalled in the Revenue Committee. However, I have improved upon that bill. So, this year I will introduce an even better bill for agricultural land valuation reform. The way agricultural land currently gets valuated for property tax purposes is very unfair. My bill will change agricultural land valuations from the current market based system to a new and improved productivity method.
The third bill I will introduce is a destroyed property tax bill. The late spring tornadoes of 2017 inspired me to write this bill. When a property owner’s house or buildings gets destroyed by a natural disaster, it does not seem right that the property owner should have to pay property taxes for as long as the house or buildings remain unlivable. Therefore, my bill will adjust the property taxes of a destroyed property to cover only those dates during the year that the property is functional or livable.
As you know, I serve on the Health and Human Services Committee. This year the HHS Committee will continue to make improvements in the services offered by the three managed care organizations which comprise Heritage Health. In addition, the HHS Committee will also be looking into recent sexual abuse allegations with children who are wards of the State and who are in our foster care system.
I also serve on the Education Committee. The State Education Board recently lowered standardized test scores for our public teachers. By lowering the standards for public school teachers, are we also lowering the quality of education for our students?
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