I wrote an article a couple weeks ago regarding the need for local political subdivisions to focus on their spending if you want you to keep your property taxes in check. Some of the feedback I have gotten since that time suggests I may need to walk through how our property taxes are determined.

I have said many times that the state does not assess property tax. That ended in 1967 when the voters banned the state from charging a property tax. To replace the revenue previously collected by the state from property taxes, the Legislature created the state sales tax. Despite not being able to assess a property tax, the state does have the power to decide which local entities have property taxing authority. The largest assessors of property taxes are public schools, counties, and cities, with school districts being the largest recipient of these taxes. Your property tax bill depends on where you live. School districts cross county lines and city lines, so property taxes vary accordingly. The total tax assessed value of all the properties located within the boundaries of a political subdivision are added together to determine the total “tax base.”

When it comes to determining your property tax bill, each political subdivision must first set its budget. Once the budget is set, the tax base is divided into the budget to determine “mill levy.” Therefore, the mill levy multiplied by the tax assessed value of your property is your tax amount. Your total individual property tax bill is the sum of each taxing authority’s tax request when applied to your property. Bottomline: the assessed tax value is only one of the components to determine your tax bill.

I also receive a lot of complaints about property tax values increasing even though no improvements have been made to the property. Keep in mind that values go up with inflation and are reflective of changes in the market. Values should go up along with cost to build or replace. If you go through periods of high inflation and strong demand, values will go up well above inflation. That is one reason you buy property.

In my opinion, our tax system in Nebraska relies too much on property taxes. I have long believed that sales taxes need to play a larger role in funding our tax system. Too many urban senators don’t share that belief. Relying on any one major source of revenue is not the answer to fixing our tax system. Every tax source has its critics. Those who oppose sales tax argue that it is a regressive tax that disproportionately impacts the poor and push back even when you avoid taxing necessities like food and medical expenses. I have long held that food, medicine, and business inputs should not be taxed. Everything else should be on the table.

I also believe that cities and counties should fund themselves with local taxes, but schools should be largely funded by the state since our state Constitution requires the state to provide every student with K-12 education. However, there need to be limits on how that funding is spent. That is where the rub comes in, particularly since schools are governed by local school boards. Where and how much taxpayer money should we spend when they are putting students first? It is easy to forget about or deprioritize the burden on the taxpayer when we are talking about the needs of our kids.

As I’ve described before, the Legislature has made many strides in reducing your property tax bills, including increasing funding for K-12 education, fully funding community colleges, and dedicating significant spending to property tax credits. We have also capped most property tax spending by cities and counties. Unfortunately, the cost of doing business for political subdivisions continues to increase, even for those who are very conservative in their budgeting. Conversely, voters are unwilling to give up many of the services funded by property taxes. Conservative spending is a challenge for local elected officials and state leadership alike.

I have lost count of those who have reached out to me with property tax concerns. This is a problem that cannot be ignored. I will continue to work with my colleagues on the Revenue Committee and in the Legislature to find ways to reduce property taxes, likely by continuing to attempt to redistribute our revenue streams more evenly among the different kinds of taxes. It is not an easy problem to solve, and it will take creativity, compromise, and political willpower.

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.