By now many Nebraskans all across the State have received a pink postcard in the mail informing them about an increase in their property taxes and a public hearing about the tax increase. These pink postcards are the product of LB 644, the Property Tax Request Act, better known as the Truth in Taxation Act. The bill was intended to give greater transparency in government and to provide taxpayers with a heads-up whenever government entities want to raise taxes. While this bill was certainly well intentioned, next year the Legislature will need to fix several problems with the bill. So, today I would like to address those concerns.

Perhaps the biggest problem with the Truth in Taxation Act is that it informs taxpayers too late about their tax increase. LB 644 requires that public hearings take place between September 17 and September 29 of each calendar year. This is too late. The notice should be received while the budget workshops are still in progress, in August or early September. Many Nebraskans who attended the public hearings found out at these hearings that the government entity responsible for their tax increase had already passed its final budget for the year. As a result, there was nothing they or anyone else could do to stop the tax increase. Had the taxpayers received the pink postcards and a public hearing be held before the passing of the final budget, they may have had a say in the matter.

Another problem with the Truth in Taxation Act relates to the number of postcards that were mailed out. LB 644 requires that a postcard be mailed out for every parcel of land in the county. In some cases, a single landowner received more than 100 pink postcards in the mail. The costs associated with mailing so many postcards means that government entities will likely have to raise property taxes in order to cover the postage and this defeats the purpose of the postcards. Therefore, the Legislature needs to change this so that a landowner receives only one notice for all of the parcels of land he or she owns in a particular county.

Another problem with the Truth in Taxation Act is that government entities do not have to inform taxpayers about a tax increase unless the tax increase amounts to more than the allowable growth percentage. Calculating the allowable growth percentage is much too confusing and cumbersome for the average citizen to figure out. The allowable growth percentage is calculated by adding two percent to the political subdivision’s real growth percentage. So, in the City of Lincoln the school board increased everyone’s property taxes but did so slightly below their allowable growth percentage so as not to have to send a representative to the public hearing. Wouldn’t you simply like to know anytime a government entity increases your tax burden?

One final problem with the Truth in Taxation Act relates to a loophole in the law. There is nothing in LB 644 which punishes a county, a school district, or a community college for failing to comply with the law. Theoretically, a political subdivision could snub the law and forget about mailing out the pink postcards or a notice without facing any statutory repercussions for doing so. So, it remains to be seen what would happen to a political subdivision if they never bothered to mail out the pink postcards or a notice.

Transparency in taxation is a good thing. Those working for political subdivisions need to look the taxpayers in the eye before ever raising their tax burden, but taxpayers also need to have a say in the matter. Raising property taxes against the will of the people is simply immoral and wrong, and denying them a voice before passing of a final budget is even worse! I appreciate everyone who attended these hearings and who shared their concerns. The Legislature will need to fix these problems next year, or better yet, repeal property taxes altogether and adopt the EPIC Consumption Tax.