With two months until the 2019 legislative session, conversation about legislation will be ramping up at the State Capitol and across Nebraska. One of the perennial topics confronting Senators is the issue of property taxes. The Tax Foundation ranks Nebraska as having the 11th-highest property taxes in the nation. As we prepare for session, it’s important to remember the history around this issue, why progress has been challenging over the years, and what can be done to cut property taxes for Nebraska’s hardworking families.
It is no secret that Nebraska has been talking about cutting property taxes for a long time. In the November 7, 1988 edition of the Lincoln Journal-Star, the paper ran this headline: “Unicam may tackle property tax in ’89: Issue seems to be insuperable monster.” In the 30 years since the headline in the Lincoln paper, and many years before, taxpayers, senators, think tanks, advocacy groups, committees, and others have gotten together to study the issue of property taxes. While the state has dramatically stepped up its efforts to provide aid to local governments, property taxes keep going up. Why is this? Because many previous efforts have not tackled the fundamental drivers of high property taxes. As we think about how to address high property taxes in the upcoming legislative session, it is important to focus on those fundamentals. There are three key things that matter when it comes to cutting property taxes: controlling spending, reforming how property is valued for tax purposes, and avoiding tax shifts.
The only way to have sustainable tax relief is by controlling spending. There is no silver bullet. If you control spending, you will have the ability to cut taxes. We have controlled spending at the state level. Over the past four years, the Legislature and I have worked together to cut the rate of growth in state spending, which has allowed us to increase property tax relief and the amount of aid to local governments. For the first time ever, the State of Nebraska provided over $2 billion in aid to local governments and property tax relief this year. Local government can also deliver sustainable tax relief by controlling spending.
Another big part of providing long-term property tax relief is changing the way we value property for tax purposes. Right now, Nebraska values property based on market value. This is particularly hard for our farmers and ranchers, who have seen land values go up 252 percent over the last 10 years. At the same time as agricultural land valuations and taxes have gone up, commodity prices have fallen significantly, putting significant pressure on family farms. One of the ways we could provide relief to our family farms is moving to an income potential assessment system used in several other agricultural states. Valuing agricultural land based on its ability to produce an income would be fairer and help protect our family farms.
One frequently suggested approach will not result in tax relief: Shifting taxes by raising a tax to lower another tax. One advocacy group put out a survey suggesting raising other taxes to lower property taxes. This will not put more money back into the pockets of hardworking Nebraska families or increase your income. It will only take more of your money for state or local government to spend. Many of the people who favor raising taxes to offset property taxes often talk about putting a tax on food. A food tax would not only be regressive and hurt our families, but it would also effectively be a tax on the commodities produced in our agricultural industry, our state’s number one industry.
Remember this: When committees, lobbyists, advocacy groups, and think tanks start ramping up this session, scrutinize their pitches closely to see if they actually make the needed reforms that help control spending. To tackle what the Lincoln paper once described as the “insuperable monster,” the Legislature will have to move beyond solutions proposed by special interests and pursue changes to our property tax system with a view for the long term. It will not be easy, but these changes have the potential to help deliver the relief property owners across the state have needed for a long, long time. If you have thoughts on property tax relief that you would like to share, I hope you will write me at [email protected] or call 402-471-2244.