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Property Taxes Sticking Point in Tax, Budget Talks

A property tax relief proposal would adjust the way farmland and ranchland are valued for tax purposes. (Mikael Wiman/Flickr)
A property tax relief proposal would adjust the way farmland and ranchland are valued for tax purposes. (Mikael Wiman/Flickr)
April 10, 2017

This is the fourth in a series of reports that examines Nebraska’s budget priorities: who stands to benefit and who could lose out?

LINCOLN, Neb. – Nebraska lawmakers have a full plate as they hammer out a state budget and a new tax package.

A major issue is how to provide relief to tax payers burdened by rising property taxes.

As a share of personal income, Nebraskans pay the 12th highest property taxes in the nation, and there have been significant increases in both agricultural land and residential property values in recent years.

Gov. Pete Ricketts says he does not believe lawmakers will approve property tax relief without an income tax cut.

But Al Guenther, a retired economics professor from Nebraska City, says that's not the way to go.

"Our governor wants to decrease taxes, and that does nothing but concentrate wealth,” Guenther states. “Concentrated wealth does nothing other than to push land values even still higher and thus driving up local property tax."

Legislative Bill 461 cuts personal and corporate income tax rates. It also aims to provide property tax relief by adjusting the way farmland and ranchland are valued for tax purposes and capping increases in valuation.

But opponents argue it isn't enough relief, and simply shifts the burden of property taxes to homeowners.

Debate on the measure is expected to begin April 21.

Taxes and the budget are a complicated equation, says Larry Dix, executive director of the Nebraska Association of County Officials. And he notes they are issues that counties monitor very closely because changes at the state level can trickle down to local communities.

"If the state has some services that they no longer provide, there's always the possibility that some things could be pushed back down to counties and any of the political subdivisions in the form of unfunded mandates," Dix explains.

Dix says he understands concerns about tax breaks leading to higher property taxes, and notes the Property Tax Relief Fund also could be affected.

"There's always the argument that if we have less income taxes, that is a component that helps fund the property tax relief fund, so if we have less in income tax then we would have to lower the relief fund,” he explains. “Therefore, property taxes, in essence, would rise. "

Lawmakers also will soon debate a measure (L-B 640) that would take $224 million in the Property Tax Relief Fund and send it as state aid to school districts. Its critics say it simply shifts the burden and is not a long-term solution.

Next Monday our series will explore how schools factor into the tax cut equation.

Mary Kuhlman, Public News Service - NE