Is Property Tax Relief In Sight for Nebraska Landowners?

As farmers and landowners look toward the 2017 growing season, they’re also keeping a close eye on the Nebraska State Legislature. Several bills addressing property tax relief are on the Legislative agenda, and farmers and landowners are keenly interested in seeing some form of progress in this arena.

Leading the charge is newly elected state senator and Albion farmer Tom Briese, who has introduced two bills to address the imbalance in Nebraska’s tax structure, citing Nebraska’s 5th-worst ranking for property taxes. He says:

According to Nebraska Farm Bureau, Nebraskans pay roughly 2.5 times more in property taxes than in state sales taxes. If we include local sales taxes, U.S. Census Bureau data suggests Nebraskans pay 56 percent more in property taxes than in sales taxes. Census Bureau data also indicates we pay 36 percent more in sales taxes than in state individual and corporate income taxes combined.

Seeking to lessen these tax burdens, Briese’s LB 313 would raise sales tax revenue by increasing the sales tax rate to 6.5 percent. This bill, coupled with LB 312, which would expand the sales tax base to include more goods and services, would provide significant tax relief in a fair, consistent way—that isn’t fueled by special interests.

Briese proposes that both bills provide for diverting a portion of the revenue raised to reimburse consumers with a newly created property tax credit fund, to be distributed to owners of real property.

Briese also argues that tax relief cannot be just about changing the tax structure; it must also address spending.

Jim Vokel, Chief Executive Officer of the Omaha-based think tank Platte Institute for Economic Research, agrees that Nebraskans need property tax relief, but disagrees with Briese’s approach of higher sales taxes.

“Tax reform should be achieved through broader bases, lower tax rates, and controlled spending, not increased tax rates and more spending,” contends Vokel.

Other bills up for discussion are LB338 and LB640. LB338, also known as the “Agricultural Valuation Fairness Act,” proposes that “all agricultural and horticultural land will be assessed based on its capacity to produce income.” This bill would limit aggregate annual valuation increases to 3.5 percent.

LB640 prioritize funds from the Property Tax Credit Relief fund to the state education funding formula, the goal being to reduce education tax levies in equalized districts, and capping the percentage of property tax support in unequalized districts.

Introduced by State Senator Mike Groene, LB640 would “give long range tax equity in school funding.” According to the bill’s statement of intent, “It eliminates the effect of valuation inflation, it puts local control into local school funding by making local school boards justify any additional property tax asking to fill the gap above the 75% factor. It will also eliminate some of the shielding effect that the property tax credit gives local government entities for spending increases.”

Hopefully, state lawmakers can come to a consensus about the best way to move forward with these proposals, and  provide more relief to hard-working farmers and landowners across the state.

Sources consulted:  Briese, Tom. “It’s time the Legislature provides property tax relief.” Omaha World Herald. 03 Mar. 2017. Web. 09 Mar. 2017.  “LB313 – Increase the sales tax rate and provide property tax credits.” Platte Institute for Economic Research. 22 Feb. 2017. Web. 09 Mar. 2017.