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Julie and I had the opportunity to attend the Nebraska Family Alliance’s annual gala in Omaha this past Thursday night. I was honored to receive the “Life and Liberty” award, along with several of my colleagues who voted to support stronger abortion restrictions last session.
The other award winner was Dr. Tom Osborne, who received the first “Lifetime Legacy Award.” As always, Dr. Osborne was witty and drove home a very important message. He shared with the crowd that he began his college coaching in 1962. He said that at the time, most of the athletes he recruited came from traditional nuclear families with both parents living in the same home; however, over the years, that all changed. As the years passed, it became clear that the family unit was breaking down. In his final years of coaching, he found it rare that players were coming from a traditional family. In fact, in some cases, he had to travel to another town to meet with one of the parents.
Dr. Osborne started the “Teammates” organization to try to help young people who didn’t have a stable home environment to help them have a better chance at success in life. The organization started out small but has since had a huge impact on youth throughout the Midwest. The results have been amazing when you look at the college graduation rate of the mentees over the years. Young people need a stable force in their lives who can help them deal with the challenges they face as adolescents.
It is clear to me that today’s youth are faced with more challenges than ever before. With the decline of the family unit and the decline in those regularly attending church, a greater number of people have lost their perspective on the sanctity of life.
The keynote speaker was Dr. Ben Carson. Dr. Carson gave an amazing presentation and is every bit the person I imagined him to be. He shared how he grew up as someone who believed in a woman’s right to choose if she wanted to carry a baby to full term. His perspective changed after performing one of the first in vitro surgeries to save the life of twins. One of the twins had developed encephalitis at a time when the twins were not far along enough to be safely delivered. Dr. Carson performed an experimental surgery that saved both twins’ lives. Years later, a young woman approached him to confirm that he was indeed the same Dr. Carson who performed the surgery on her mother that saved her life. It was at that point in time that he realized that all lives are worth saving, including preborn babies. I could not help but identify with his personal experience of having one moment that forever impacted his beliefs. He has been a strong pro-life advocate from that time forward.
Some have asked me if bills like LB574 were more important than spending time lowering our taxes, reducing regulations, or creating new opportunities for my constituents. I answer that by saying that my core values cannot be turned off when I do the work of representing the residents of District 42. In the end, you need to look yourself in the mirror every day and know that what you are doing is making a positive difference. Dr. Osborne and Dr. Carson reminded me of that on Thursday night.
Last week, the Nebraska 4-H Foundation voted to turn over all $2 million of the net insurance proceeds from the camp facility that burned near Halsey last fall. I could not be more pleased with their decision and for their support of the project moving forward. As was discussed in the media, the goal is not just to replace the 4-H camp but to bring a much-expanded concept that can serve a broader purpose and have the staying power to support itself. This is an ambitious endeavor that will be built in phases. Once the feasibility study is complete, we will launch an aggressive fundraising campaign through the Nebraska Community Foundation.
Thank you to Jeff Yost and his staff with the Community Foundation for their leadership in helping to organize this process and keep the project moving forward. I am also grateful to all the local residents who showed up for the hearings and who are committing their time and effort to assist with this project. I remain committed to achieving economic growth that will serve to improve the lives of those in all parts of District 42.
Please feel free to reach out to me directly at mjacobson@leg.ne.gov or 402-471-2729. My door is always open!
As we enter September, harvest is just around the corner, fall sports have begun, and all our local taxing authorities are finalizing their annual budgets.
As discussed in previous articles, property taxes are assessed at the local level by local taxing authorities, who are represented by locally elected boards. As voters, you have the ability to attend meetings held by your taxing authorities and can decide who represents you on each board with your vote. Far too many voters fail to take advantage of the opportunity to better understand how each taxing authority operates and give their input regarding their spending proposals.
The property tax journey begins on January 1, which is the “as of” date for determining the value of your property for the current tax year. Once the values are confirmed, each property owner is notified of any changes in their property value. This, in turn, gives property owners the opportunity to protest the valuation, if they believe the value is incorrect. Once all of the property protests have been settled, the assessor can now determine the total property tax “base” for each taxing authority.
To be clear, every property is located inside certain taxing districts. If your property is within municipal limits, you are subject to city or village taxes. You also will pay taxes for your county, but your school district taxes will depend on where your property is located as well. Ultimately, your property tax is determined once all the taxing authorities where your property is located have finalized their budgets. The tax rate (mill levy) for that political subdivision is then determined by dividing their total budget needs into the total tax (value) base of the property within their taxing authority. The County Treasurer simply adds up all the mill levies for each taxing authority your property is located within and multiplies the total mill levy by the assessed value of your property to determine your property tax.
This past week, the city of North Platte met to develop its proposed budget. If it receives final approval, it will reduce its property tax request by $57,538, which will help reduce the total property tax bill for those with property located within the city limits of North Platte. Keep in mind that the actual property tax “value” of property within the city limits of North Platte increased by 8.6% year over year. So, as we have stated before, it is not the value of your property that determines your property tax, but instead, it is the combination of your property value and the mill levy that determines your property tax.
It is important to remember that strong sales tax revenues helped to reduce their property tax need, but growth in sales taxes has been possible because city leaders chose to support major new developments by backing important incentives necessary to make these developments possible.
It is also important to keep in mind that our local political subdivisions are dealing with the impact of inflation, just like every consumer and business. All employees expect annual raises and benefit costs to continue to rise, especially the cost of health insurance. At the same time, the cost of fuel, electricity, repairs, and materials are up as well. That is why it is important to remain focused on growing our tax bases. This has happened in North Platte as new construction continues to increase the size of the property tax base. Additionally, the sales tax base continues to increase sales tax collections. There is an old saying that says, “If you are not growing, you are shrinking.” This happens because you must grow your tax “base” to offset the annual growth in expenditures.
Although the school districts have the greatest impact on local property taxes, the city of North Platte’s proposed budget is a great start for those owning property in North Platte. I expect most of the villages within District 42 will see their school districts limit their tax asks due to the new funding coming from the Legislature through the “Foundation Aid” of $1,500/student and the higher state aid for special education funding. But, school districts have a very high number of employees compared to their total budget. This makes it more challenging to hold the line on total expenditures. Nonetheless, the new state aid will certainly help reduce the otherwise larger revenue needs. We will continue to watch as the budgets continue to be released.
Please continue to contact me on this and other issues at mjacobson@leg.ne.gov, or feel free to call my office 402-471-2729. My door is always open!
This past weekend, Julie and I were happy to take part in the annual Hershey Fall Fest parade. As an added bonus, we were joined by Miss Nebraska 2023 Morgan Baird. Prior to becoming Miss Nebraska, Morgan served as a page in the Nebraska Legislature. She is a class act.
I also spent time in Lincoln last week to catch up on some legislative duties and attend the first meeting of Governor Pillen’s Property Value Working Group. This first meeting was the first of four set to occur before the end of 2023. Hopefully, we will be able to offer a bill in the 2024 legislative session.
As the frustrations with property taxes reach the boiling point, some seek alternative ways to fund local governmental bodies. Although I share those concerns, I caution that the grass is not always greener on the other side of the fence.
One proposed solution is the Eliminate Property, Income, and Corporate (“EPIC”) tax plan. At its simplest, the EPIC tax would eliminate property, income, and sales taxes (but not excise taxes) and replace them with a “consumption tax,” taxing only new goods and services. In theory, this would allow consumers to control their tax bill by moderating their spending habits. Currently, a petition drive is underway to put the EPIC tax on the ballot in 2024.
I can see the appeal of the EPIC tax. We all want to send less money to the government, and it seems fair: that those with more money will spend more money and, therefore, pay more in taxes. Unfortunately, implementation is not so simple.
Here are a few things to consider before supporting the EPIC tax:
First, the ballot initiative wants to change the Nebraska Constitution to prohibit property, income, and sales tax and only authorize excise taxes and a consumption tax. Making the EPIC tax a constitutional mandate is hard to undo and risky, particularly given that no other state has tried this type of tax scheme.
Second, the ballot initiative simply directs the Legislature to implement the EPIC tax. Although hard to avoid with the way the “single subject” rule regulates how ballot initiatives can be drafted, there is no guarantee the Legislature will implement the EPIC tax as its proponents envision. Tax policy is very complex, and there will be a lot of interest involved in implementation.
Third, property taxes are currently assessed locally, by locally elected officials. As a result, you have the power to elect others to represent you if you truly believe that they are not representing your best interests. Proponents of the EPIC tax would instead send all the taxes collected to the State, where boards made up of unelected officials would decide how the money is distributed. Do we really believe that a board in Lincoln will not force school consolidation, given the disparity in cost per pupil in rural schools versus larger urban schools? What about consolidating county seats? How about road maintenance? It seems to me that local control would be a thing of the past.
Fourth, the consumption tax will not be at the current sales tax rate. Today, the State portion of sales tax is 5.5%. In the 2021-22 Fiscal Year, Nebraska collected $2.1 billion in sales taxes. It also collected $3.2 billion in individual income taxes, $715 million in corporate income taxes, and about $250 million from other sources for a total of approximately $6.26 billion. Additionally, local taxing authorities collected just over $5 billion in property taxes. This takes us to $11.26 billion in statewide tax collections, not including local option sales taxes that typically take the existing retail sales tax to 6.5-7.5%.
So, the question then becomes, how high does the new “consumption” tax rate need to be? Proponents suggest 7.5%, but the Nebraska Chamber of Commerce estimates that the actual rate would need to be 15-20%. Will Nebraskans truly be saving? Can we ensure sufficient revenues, particularly when shoppers in many communities can easily cross into border states? What happens to the cost of owning and operating a business in Nebraska?
Fifth, because the consumption tax applies to all new goods and services, it can really add up for big purchases. For example, let’s pretend a couple decides to purchase a new home for $300,000, and the consumption tax is 10%. If they choose to put down only 10% of the purchase price, here is the total amount that they would need to bring to closing: $30,000 for the down payment, $30,000 to pay the consumption tax, $27,000 to pay the consumption tax on their $270,000 mortgage, plus payment for closing costs of title insurance, transfer fees, and the associated consumption taxes on these items. In the end, they would need nearly $100,000 at closing to buy a $300,000 home but would come away with only $30,000 in equity. Is this truly a good replacement for property taxes, especially for young families?
I believe we need to explore every solution to our high property tax problem. Unfortunately, I’m not convinced the EPIC tax is ready for prime time. The more responsible path is to continue the Legislature’s work to reduce property taxes and better balance the tax burden while continuing to seek a long-term solution.
Please continue to contact me on this and other issues at mjacobson@leg.ne.gov, or feel free to call my office 402-471-2729. My door is always open!
Last week, I sat down with Lincoln County Assessor Julie Stenger to prepare for my first meeting of the Governor’s Property Tax Valuation Working Group. Julie has been in her role for many years and has a great understanding of the assessment process. She and I had a great discussion, and I was able to get a better understanding of the fine points of the assessment process. Julie provided me with the information I needed to be well-prepared to represent the interests of this part of the state when the Working Group meets.
I expect that the goal of the Working Group will be to take a closer look at how we value various types of property and whether the process is fair. I also assume that we will look at the Homestead Exemption, and other tax exemptions to confirm that they are carried out consistently and that the parameters make sense. As I have discussed before, your valuation is only one part of the property tax equation. But ensuring that our property tax “values” are set fairly is the first step in making certain that the property tax burden is fairly distributed.
Two of my biggest concerns with our property tax system are the impact it has on the elderly and agricultural producers. Many retirees face a similar scenario: a couple decides to retire after their homes are paid off, and they have two social security incomes to supplement their other retirement savings. Then, one of the individuals passes away, removing one of the social security revenue sources. Meanwhile, their property value continues to rise, sometimes increasing their property taxes and/or causing them to lose their Homestead Exemption.
The Legislature created the Homestead Exemption many years ago in an attempt to give homeowners over the age of 65, disabled individuals, and disabled veterans a break on property taxes. It is important to remember that the state of Nebraska fully reimburses the lost revenue for local political subdivisions resulting from the Homestead Exemption. We always hear about “unfunded mandates,” but this is a “funded mandate” by the state.
Generally, receiving a Homestead Exemption requires both the individual to qualify (either by income level or disability) and their property to qualify (based on the home’s value).
For a person over 65 to qualify, they must earn less than $33,100 as an individual or under $38,900 for those who are married, closely related, or widowed. For people who are 100% disabled, they can earn up to $37,300 as an individual or $42,700 for married, closely related, or widowed. If their incomes are higher, then the amount of the exemption is reduced by a percentage until the income levels reach $48,600 for singles, $57,700 for married, closely rated, and widowed, and $52,800 for single disabled individuals, and $61,600 for married, closely related, and widowed. If a disabled Veteran is 100% disabled, they have no income limits and no property value limit, but their exemption would be limited to their residence, a detached garage, and up to one acre of land. If they are not 100% disabled, they would qualify under the requirements for a disabled person requirements.
Even if the individual qualifies, their property must also meet certain requirements. For a person over 65, their primary residence must be tax assessed at a rate below 200% of the average value of homes in the county plus $20,000. In Lincoln County, the average home value is $157,498, so a primary residence would qualify if valued under $334,996. For a disabled person, the calculation is under 225% of the average home value plus $20,000. There is no home value limit for Veterans who are 100% disabled.
There are a couple of modifications that I think should be considered. First, I would like to see Veterans who are more than 50% disabled get a full exemption without having to qualify under the individual exemption. Second, I also would like to see us freeze the home value for anyone who must meet the home value calculation to receive the Homestead Exemption, only increasing the valuation for any improvements beyond ordinary maintenance. This would protect those who are impacted by inflation adjustments or spikes in property valuations.
I also think there are broader valuation changes that should be considered. First, assessors must physically inspect all properties in their jurisdiction every six years, essentially reviewing 1/6th of the properties within the county every year. However, there is more that goes into valuations than just the physical inspection. I have long believed that farmers and ranchers are negatively impacted by the property “valuation” process because the assessors are required to reassess agricultural and commercial values at least every three years based on average arms-length sales over the previous three-year period. As many of you know, many farms and ranches are purchased by investors looking for a hedge against inflation or a safe place to park their money. When this happens, land values move to levels well above economic values. Meanwhile, commercial properties are not used as inflation hedges, and they tend to follow economic value. The same is true for residential properties. These properties have values that tend to mirror rental rate increases. Additionally, homes tend to stay below the cost of building new ones. Therefore, I believe that agricultural landowners tend to pay higher property taxes in relation to the income generated from the property.
I am looking forward to the Working Group meeting and will work hard to represent our area’s interests. Please continue to contact me on this and other issues at mjacobson@leg.ne.gov, or feel free to call my office at 402-471-2729. My door is always open!
This past week started with Julie and I attending parades in Brady, Stapleton, and Mullen. We then spent this Saturday in Maxwell, participating in their annual parade. Eating some of the three delicious pies from Maxwell’s pie auction was the perfect end to the week. We now have our sights set on the Hershey Fall Festival!
We also attended the annual Governor’s Ag and Economic Development Summit in Kearney. The event began with the annual Nebraska Diplomats’ awards banquet. I was honored to join other area leaders in accepting the Community of the Year Award on behalf of the City of North Platte. In recent years, the North Platte area has quietly ignited amazing growth that will have a profound effect on this area for decades to come. I would be remiss if I did not acknowledge the outstanding work of Gary Person, who used his long history of economic development to play a key role in orchestrating the growth we see today.
Although these major developments are in the North Platte/Hershey area, the economic impact and population growth will have a large reach. Our greatest challenge over the next few years will be finding housing for all the new workers needed to meet the new job creation. There may never be a greater opportunity to grow all the communities in District 42 than right now. Going forward, we need to use all the tools in our toolbox to lower the cost of new housing and improve the existing housing stock. I look forward to working with all our area leaders to maximize economic development opportunities.
This week, Governor Pillen will be in North Platte to visit with local education leaders and attend a rally for those who support the Opportunity Scholarship Act. Governor Pillen spent his entire campaign making it clear how much he cared about helping every child in this state reach their fullest potential. To that end, he included in his budget more than $300 million in annual funding increases for public schools and a $1 billion fund to help ensure that these increases will remain in place. He also pushed for the Legislature to adopt the LB753, the Opportunity Scholarship Act.
As disappointing as it is to see that there is an effort to repeal this act, I have confidence that the voters will see through all the misinformation out there and uphold the Legislature’s decision on this issue. In the end, this bill is about reducing barriers that prevent low-income families from choosing their child’s school. I have said before and will say again, the bill is not a slam on public schools or teachers; it is about opportunities for every child to attend the school that best fits their learning style. Just as option enrollment allows parents to transfer their students from one public school to another, low-income parents can now add private and parochial schools to their options.
During my travels this past week, I had the opportunity to join the area public school superintendents at a workshop in Sutherland. I appreciated the invitation to meet with them and to understand better the daily challenges they and their teaching staff face every day. As many of you know, I was a vocational agriculture instructor after graduating from the University of Nebraska many years ago. Although teaching had its challenges then, I cannot imagine teaching today. The changes in society over the years have brought teaching challenges in the public school systems today to a new level.
Teachers have always been there to help support each and every one of their students. But the drug issues that have infested our nation are here in western Nebraska as well. As a result, teachers and school administrators have more and more interactions with law enforcement and mental health providers. These challenges go largely unnoticed by the general public but are real issues that teachers deal with every day in their classrooms. As your District 42 State Senator, I am committed to working with the Governor and school administrators to find ways to remove the barriers to education that can result in better educational outcomes.
If you have issues on your mind, please feel free to reach out to me directly at mjacobson@leg.ne.gov or 402-471-2729. My door is always open!
As the summer winds down and students get ready to return to school, we’re taking advantage of warm-weather activities. Over the weekend, Julie and I participated in the Brady Days annual parade, drove up to Stapleton to participate in the annual Logan County Fair parade, then on to Mullen for the Hooker County Fair parade and annual beef barbeque. We also carved out time to take part in a portion of the annual Rail Days activities in North Platte. I am always amazed at the elaborate model train display that is held at the D&N Event Center. Thank you to the Kiwanis Club for providing a delicious pancake feed.
I always look forward to attending events throughout District 42 and having the opportunity to speak to constituents in person. There is nothing like one-on-one conversations to find out what is really on people’s minds. As we begin working on legislation for the coming session, these conversations provide me with valuable information to develop bills that can address the needs of District 42.
One issue that’s getting some conversation is the Lincoln County Commissioners’ possible zoning regulations for wind turbines. As a landowner, I have always believed that I should be allowed to use my land as I see fit with very limited interference from the government. However, this gets complicated when one’s land use could significantly impact the value of my adjacent land. This is the primary reason that zoning laws exist.
Zoning regulations, when properly enacted, can serve as a way to protect all parties without preventing individual landowners from enjoying the use of their property. If you live in a neighborhood that is intended to be made up of single-family homes, it can be disruptive to the neighborhood if someone decides to build an apartment house on their property. It can also negatively impact property values if someone pulls in a mobile home on their property.
It is also important to balance the value of different types of uses, particularly when it comes to livestock facilities. Once again, this issue cuts both ways. If I have a cattle feed yard that was built many years ago, and my neighbor subdivides his property to allow for high-end homes on acreages, I should not be forced to shut down my feed yard because the “new” neighbors don’t want the odor. Meanwhile, if I decide to build a new feed yard right next to an existing community, you may want some protection from the new land use. This is the issue facing the Lincoln County Commissioners when it comes to wind generators.
There has been a push throughout the state to locate wind generators on farms and ranches. The promoters are offering lucrative lease rates to entice landowners to enter into long-term leases to allow the construction and operation of wind generators on private land. The question before the Commissioners is, “How far from the property line should these generators be located?” Many of us who live in rural Nebraska live here because we enjoy the peace and quiet and the incredible views of the rural landscape. This can be disrupted when these towers are built. I wish the Commissioners luck as they try to find the right balance.
On a side note, it is no secret that I am not a fan of wind energy. Besides being one of the most expensive sources of power (without tax subsidies), the impact on wildlife and landscape is significant. Additionally, wind generators are expensive to build, transport, and operate. They also have a limited life span which also raises the question of how and where to dispose of them once they have reached the end of their life.
To be sure, energy diversification is important, and we cannot only rely on fossil fuels as our primary sources of “reliable” and low-cost energy. I hope we continue to explore a wide variety of alternatives. For example, “Small Nuclear” energy facilities and large-scale “Sodium Cooled Reactors” like the one under construction in Kemmerer, Wyoming can provide safe sources of energy at a low cost. These types of facilities can also take advantage of existing infrastructure, like Gerald Gentleman Station. We are very blessed to have such a significant energy facility in our area, and keeping this plant in place will continue to be one of my highest priorities in the Legislature. The quality employment base and the positive impact that this plant has on economic development in this area is overwhelming.
Please continue to contact me on this and other issues at mjacobson@leg.ne.gov, or feel free to call my office at 402-471-2729. My door is always open!
Julie and I had the opportunity to spend time at the Lincoln County and Thomas County Fairs this past week, as well as the Logan County Fire and Rescue barbeque and fundraiser. At the Thomas County Fair, we participated in the annual parade, the classic car show, and all the activities in the pavilion. I also engaged in some serious negotiations with a young girl to sell me her cookie jar filled with cookies (she drove a hard bargain). Talking to constituents in these casual settings is a great opportunity to better understand their needs and exchange information. We hated to miss the Perkins County Fair the previous weekend but had an unavoidable conflict.
This week, we plan to attend Brady Days, the Logan County Fair parade, and then up to Mullen for the Hooker County Fair and parade. Should be a great weekend, and we’re looking forward to it.
This week, I want to respond to the many questions and concerns about LB514, the voter ID bill. Last November, Nebraskans overwhelmingly approved Ballot Initiative 432, the Photo Voter Identification Initiative. Ballots indicated that “A YES vote supported amending to Constitution to require valid photo identification in order to vote and authorize the state legislature to pass laws to specify the photo identification requirements.”
It is important to remember that, although the Legislature was given the authority to develop the rules, state laws must not violate the National Voter Registration Act of 1993 (NVRA). The NVRA (also known as the motor voter law) sets forth certain voter registration requirements with respect to elections for federal office. The NVRA requires that State offer voter registration opportunities at State motor vehicle agencies (section 5), by mail-in application (section 6), and at certain State and local offices, including public assistance and disability offices (section 7). The NVRA then goes into detail as to how each of the sections listed above are to be carried out. The NVRA also provides the process required to be followed for first-time voters who register to vote by mail.
Because of NVRA, the Legislature’s Government, Military and Veterans Affairs Committee had limited flexibility in writing the rules to implement Initiative 432. Three bills were introduced to deal with this issue, but ultimately Senator Brewer’s LB514 was amended and passed near the end of the session to set up the rules for enacting this initiative. This bill was hotly debated in the Committee but passed by an overwhelming majority when it reached the full Legislature. The Unicameral will continue to evaluate what changes need to be made to ensure our elections are fair, but in the end, this bill fulfills the requirements of Initiative 432 and falls within the guidelines of the NVRA.
One of my concerns from the beginning was to make certain that all eligible voters have access to vote and that everyone who wants to vote can do so with limited barriers. However, I have always believed that votes should only be cast by eligible voters and only be counted once. Voter ID, when crafted correctly, can increase election security without keeping eligible voters from exercising their rights.
Now that legislation has been passed, please remember that you need to bring a qualifying photo ID when you vote in all future elections. There are several qualifying photo IDs, including a driver’s license, military ID, and photo IDs issued by a Native American Tribe, an assisted living facility, a hospital, a skilled nursing facility, or a nursing home. There are also procedures to confirm the identity of those casting a provisional ballot.
As we get closer to Nebraska’s next election, the May 2024 primary, the Secretary of State’s office will post more information about the new Voter ID requirements at https://sos.nebraska.gov/elections/voter-id. In the meantime, the website includes a link to the final language of LB514. If you are interested in learning more about the federal NVRA, you can find a summary and a link to the full text through the U.S. Department of Justice’s site at https://www.justice.gov/crt/about-national-voter-registration-act#prov.
If you have questions about the Voter ID bill or other issues you’d like to discuss, please feel free to reach out to me directly at mjacobson@leg.ne.gov or 402-471-2729. I also look forward to seeing many of you in person as we travel throughout District 42 during the interim!
Housing supplies continue to be tight as our region continues to grow job opportunities, primarily due to high construction costs coupled with rising interest rates. This combination is making new housing unaffordable for far too many. Since there are limited lots ready to build on in many areas in District 42, it often becomes necessary to develop new subdivisions to create new lots. Given the infrastructure costs involved, new lots can cost as much as $100,000 per buildable lot. That does not leave much room in the budget to complete the home.
One alternative is to consider remodeling older homes. A second is to purchase older homes that are beyond repair, tear them down, and build a new home on the existing lot with the necessary infrastructure already in place. This can certainly help reduce building costs, particularly when paired with the Micro-TIF program.
Micro-TIF was first introduced by former Senator Mike Groene in an effort to incent property owners to fix up their existing homes in exchange for getting property tax relief on the incremental increase in property taxes resulting from the improvements. Unfortunately, the structure of the bill made it hard to achieve the goals envisioned. During this session, I introduced LB98 to improve the program. LB98 was eventually amended into and passed as part of LB531, one of the Urban Affairs Committee’s priority bills.
With the improvements made in LB98, Micro-TIF can provide the necessary incentives to spur improvements to existing homes or replace homes beyond repair.
Under the “regular” Tax Increment Financing (TIF) program, which only covers the purchase of land and installation of infrastructure, vertical construction expenses are “eligible” expenses under Micro TIF. This is important because the incremental property tax base increases significantly if an older home is torn down and replaced with a new home.
For example, let’s assume you can buy an older home on a lot with public infrastructure in place for $25,000. You tear the home down and replace it with a new home for an additional cost of $200,000. If the property has an assessed value after completion of $250,000, the increase in the annual property tax would be around $4,500/year versus about $375/year with the previous home. With Micro-TIF, the owner can put a Micro-TIF loan in place when the project is completed to help cover the costs of the improvements based on the value of the property tax increase. Keep in mind that the Micro-TIF loan would be separate from any other mortgage or construction loan.
The Micro-TIF loan is designed to allow the annual “increase” in property taxes paid each year by the homeowner (in this example, $4,125/year) to cover 15 years of payments, including both the principal and the interest. The loan, or note, is repaid from the property tax increase for the next 15 years or until the loan is paid in full, whichever comes first. In this example, the upfront note amount could be about $50,000, given current interest rates.
In sum, the property owner could borrow $50,000 on a separate note once the home is finished and have the note fully repaid from the property taxes rebated back to each year, based on the incremental increase in the assessed value.
The property taxes are paid by whoever owns the property now and in the future. The payments go back to the original owner/developer who paid for the improvements to the home and took out the note. The county treasurer will still collect the amount of property taxes that would have been paid to the taxing authorities if the property had not been improved. Only the “incremental” tax payments go to the owner/developer. After the Micro-TIF loan is repaid, the county treasurer will collect the full property tax payments going forward.
Some have said over the years that TIF removes property taxes from the property tax roles. The fact is, no taxes are removed because all existing tax base remains at the same level as they were set at prior to granting TIF. The “new” incremental tax base is only temporarily redirected to repay the loan that provided the incentive. It is important to remember that you cannot lose what you do not have. If the only way to get the new home built is to grant TIF, then what has been lost? Homes eligible for Micro-TIF will only sink further into disrepair if no investment is made. If we do not build more housing, then our ability to grow our market and fill open jobs will be difficult. We need to use all the tools in the toolbox to solve this problem.
I will be traveling to each of the communities in District 42 to meet with the town and village leadership to discuss the details of this program and how it could be used in each community. If used strategically, Micro-TIF can be an effective method of increasing new and improved housing options in our area.
Please continue to contact me on this and other issues at mjacobson@leg.ne.gov, or feel free to call my office 402-471-2729. My door is always open!
At the beginning of the year, Governor Pillen made it clear that he wanted every child to have an opportunity to receive the best education possible. This not only meant providing more funding for public schools but also finding a way for low-income families to access private schools if that was the best option for their children.
For years, we have allowed public school students to transfer between public schools (option enrollment) to allow each student to be in an educational setting that best suits their needs. In Lincoln County, approximately 70% of the students attending public school in the Maxwell District are “net transfer” students. Over one-third of the students in Hershey Public Schools are net transfer students, as are about one-third of the students attending McPherson County School in Tryon. Although there may be many reasons for this trend, it is clear that the parents of these students see value in moving their child to the school that best fits their learning style. However, many parents also believe that having their children in a private or parochial school is best for them. For that reason, the Governor and 33 members of the Legislature felt that providing a mechanism for children of low-income families to obtain scholarships to attend private or parochial schools made sense. In fact, prior to the passage of LB753, Nebraska was the only state without some kind of state support for this to happen.
Given all the misinformation floating around, I want to take some time to outline what the LB753 does and how the scholarship program works.
LB753 provides for a Scholarship Granting Organization (SGO) to accept contributions from individuals, corporations, and trusts to be used for funding scholarships for low-income students wanting to attend a private or parochial school. The donor would receive a dollar-for-dollar tax credit, not to exceed 50% of their current year’s state income tax liability. However, they would not be able to deduct that donation from their Federal income tax return. Once an SGO receives an application to fund a grant, they would confirm with the Department of Revenue that funds are still available. If so, the donation would be accepted, and the donor would receive their tax credit.
The SGOs must allocate scholarship funds based on the neediest applicants first. No more than 25% of the funds can be carried over from year to year should there not be enough qualified applicants. Any funds in excess of 25% would be returned to the state’s General Fund. This is not a voucher program, the state does not make any direct payments to any private school, and the SGO cannot limit educational scholarships to only one qualified school.
I worked with four of my colleagues during the session to make improvements to the bill and increase accountability. One such change is requiring an annual audit to be provided to the Department of Education. Senator Linehan was very open to working with us, and in the end, I believe this is a good bill that helps fulfill the goal of getting every student in the state access to the best educational environment. This is neither an assault on our public school system nor is it an attack on teachers. This is all about students and educational opportunities.
Some are claiming that this bill takes money away from public schools. This is simply false! This year, the Legislature increased funding to public schools by $1.309 billion. Annual funding was increased by $309 million, and $1 billion was set aside to ensure that sufficient funding would be in place should future revenues be reduced. The initial funds allocated to the Opportunity Scholarship Fund is $25 million in the first year. This program will be closely monitored to ensure that it provides the outcome that the Legislature intended. I am hopeful that it is given a chance to work.
Please continue to contact me on this and other issues at mjacobson@leg.ne.gov, or feel free to call my office 402-471-2729. My door is always open!
This last week was full of District 42 events! Julie and I had a wonderful time being part of the Sutherland annual Independence Day parade and talking to local constituents. I then welcomed Governor Pillen to North Platte to discuss his plans to connect Nebraska, an issue especially critical for those of us in western Nebraska. On Friday, we attended the celebration for the 10th Anniversary of the opening of the Prairie Arts Center. Finally, we rounded out the week by attending the North Platte Pow Wow. In addition to being a time to experience Native American singing, drumming, and dancing, it was also a special chance to celebrate veterans. I look forward to attending more of these types of events throughout the interim!
This week, I want to continue discussing property taxes by giving you some more insight into the changes the Legislature made this year to the funding of community colleges.
As a reminder, property taxes are only assessed by local taxing authorities. In 2021, Nebraskans paid over $4.73 billion in property taxes. In comparison, $3.1 billion was paid in state and local sales taxes, $3 billion in net individual income taxes, and $644 million in net corporate income taxes. Schools accounted for 60% of the property tax recipients, followed by 16% going to counties, 11% to cities and villages, and just over 5% to community colleges. The remaining 8% of property taxes are collected by Natural Resources Districts, Educational Service Units, Fire Districts, Townships, and other local taxing authorities.
Originally, the funding for Nebraska community colleges was intended to be divided, 40% from State funding, 40% from local property taxes, and 20% from tuition. Although tuition continues to account for about 20% of the funding, the balance between state and local funding broke down over time, with local property taxes providing more than double the resources that the state appropriated.
LB342, enacted in 2007, created a state funding formula to fill in the difference between community college needs and locally available resources (FTE’s). Needs are based on enrollment and the cost of education (REU’s). Local resources are derived from property taxation. The formula allows for a 3% automatic growth upon the most recent years of expenditures, plus any additional growth experienced by the colleges.
The Legislature also enacted the Property Tax Credit Act in 2007 to provide property tax relief to Counties based on the real property value in each county. This credit began at $105 million and has steadily increased over the years. LB1107 was enacted in 2020 to increase appropriations to the Property Tax Credit Fund and establish the Nebraska Property Tax Incentive Act, which created a new income tax credit for property taxes paid to fund school districts.
LB873, passed in 2022, expanded the LB1107 credit program to add a new refundable income tax credit for property taxes paid to fund community college. The value of the tax credit is $50 million for calendar year 2022, $100 million for 2023, $125 million for 2024, $150 million for 2025, and $195 million for 2026. Since community colleges are expected to levy $265 million in taxes in 2023, a $195 million tax credit would offset 75% of the entire community college property tax burden.
Now in 2023, the Legislature approved LB253. LB253 provides that, beginning in Fiscal Year 2024-25, community colleges will no longer levy property taxes to fund operating expenses. Instead, the state will fund 100% of the operating expenses levied in Fiscal Year 2023-24, but in no case less than 7.5 cents per $100 of valuation. In the case of Mid-Plains Community College, this will result in additional funding because their leadership has kept their levy below the 7.5%. Kudos to Mid-Plains. The state will increase its funding by 3.5% each year to account for inflation. If the state does not meet its obligation, community colleges can implement a levy to make up the difference. The community colleges also retain the ability to levy 2 cents for capital improvements and continue any levies required to repay existing bonds.
As you can see, this is real property tax relief that the Legislature has provided to a local taxing authority. I was disappointed to hear the Southeast Community College Board of Governors has initially voted to raise their tax levy to the maximum this year to generate more reserves prior to the new law going into effect. The goal of the Legislature was to reduce property taxes, this action is insulting to the legislature and the taxpayers who live in their area. I have joined several of my colleagues by signing a letter addressed to the Board asking them to reconsider this action and wouldn’t be surprised if there was legislation introduced to make adjustments to the law next year if the Board moves forward. I hope that the Board does the right thing.
Please continue to contact me about issues impacting you at mjacobson@leg.ne.gov, or feel free to call my office at 402-471-2729. My door is always open!
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