If you’re a farmer or landowner in Nebraska, chances are you have a keen eye focused on the Nebraska Legislature lately, as Governor Ricketts’ Property Tax reform bill, LB461, saw first round debate in Nebraska legislative talks on Friday, April 21st. This fact, in itself, marks an important milestone, as it’s the first time in the past 10 years that a bill addressing property tax relief has seen floor debate.
Obviously, Ricketts and many other state senators have heard a loud and clear message from their constituents: It’s time for Nebraska to shed its rank as the 5th-highest taxing state in the nation and focus on providing real tax relief to farmers and landowners.
The bill—officially the 2017 Nebraska Taxpayer Reform Act, LB461—is slated as a comprehensive tax reform package. According to Ricketts, the bill would seek to:
- Change the property valuation method from a market-based system to an income-potential assessment, said to be a more fair measure, and used by the majority of surrounding states
- Cap the statewide land valuation growth at 3.5 percent, which, had this been in place during the last ten years, would have changed the ag land valuations from 252 percent to 36 percent
- Protects K-12 education, by investing more than 30 million dollars into the state aid formula
Had LB461 been in place in 2017, according to proponents, it would have reduced state ag land valuations by $12 billion and have reduced ag land property taxes by 12 percent statewide—a $147 million tax savings for farmers and landowners.
The Platte Institute, a non-profit, non-partisan independent think tank based in Omaha, delved further into the nuances of the bill, finding that, because the bill requires state revenue projections to meet certain growth targets (revenue growth “triggers”,) the result would benefit taxpayers without compromising the state budget.
These revenue growth triggers are said to enable tax rate reductions without making cuts to state spending by dedicating a portion of new state revenue growth to tax reform—so long as state revenues meet certain benchmarks. Of the states who have employed such revenue growth triggers, those built into LB461 would be “the most cautious yet adopted by any state,” according to the Tax Foundation’s testimony to the Revenue Committee in February.
That being said, the bill still has its detractors, who say that the bill represents a tax cut to the wealthy. According to the Nebraska Farmers Union, the bill places more emphasis on income tax reduction than property tax reduction, and jeopardizes future school funding. According to the Nebraska Farmers Union website, LB461 would create further imbalance between income, sales, and property taxes by giving $400 million of income tax cuts, thereby putting even more pressure on property taxes to address potential state budget shortfalls.
However one looks at the issue, it’s clear that state senators have recognized the need for meaningful property tax relief, and will continue to focus their efforts to provide relief to farmers and landowners.
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Sources consulted: “Quick Guide to LB461.” Nebraskafarmersunion.org. Nebraska Farmers Union. 19 Apr. 2017. Web. 26 Apr. 2017. Weinburg, Adam. “News Conference Call: LB461 Will Grow State & Family Budgets.” Platteinstitute.org. Platte Institute. 17 Apr. 2017. Web. 26 Apr. 2017.