Nebraska ag groups back tax relief bill
The agriculture trade groups in Nebraska are backing a bill, LB 289, that could deliver $500 million in property tax relief by changing the process by which the state funds K-12 schools.
Nebraskans would see a range of reductions to property taxes, according to Nebraska Farm Bureau president Steve Nelson, with farmland seeing an approximate reduction of 15 percent.
Jay Rempe, senior economist, Nebraska Farm Bureau, said the bill contains two broad categories, revenue in the form of sales tax by one-half a percent and expanding the sales tax base to cover some goods and services currently exempted which, together, equates to about $372 million, combined with $109 million from the property tax credit program for an estimated $482 million. This funds the expansion in state aid to schools to relieve what Nelson calls an overreliance on property taxes.
“From an agricultural, rural perspective, there are probably three critical components to that,” Rempe said. “The first is the foundation aid component that the bill captures 25 percent of the sales and income taxes collected in the state each year. Divide that number by the number of students in the state and each district will receive a per student payment based on the number of students they receive.”
Rempe said the per student funding from the state equals roughly about $3,400 in year one and $3,600 in year two. Under the bill, Nebraska schools would receive at least one-third of the cost of educating students, establishing funding equality across rural and urban districts. The bill also reduces the property values in the state aid formula, allowing some districts to look “less wealthy” in the formula.
Robert Johnston, president of the Nebraska Soybean Association, said LB 289 would ensure that all Nebraska school districts would receive state funding. Johnston said he lives in a school district that receives zero state funding, a fact he calls almost unconstitutional. Johnston said the property taxes on the parcel of land on which he lives have exactly doubled in the past 10 years.
“On May 7, 2009, 10 years ago today, the Chicago Board of Trade soybeans opened at $11.32 a bushel,” he said. “May 7, 2019, a few minutes ago, the closest delivery point for me up the road here at my local elevator was getting $7.25. I think that’s a good perspective. Folks, we’re in a crisis out here and I believe 289 is very important and we need the help.”
Dan Nerud, president of the Nebraska Corn Growers said the three-legged stool of property, sales and income taxes has been out of balance, a problem he said 289 would address by reducing property taxes by 7 to 20 percent and reducing taxes paid for schools from 15 to 40 percent.
Nebraska Pork Producer president Tim Chancellor also serves as an elected member of the school board and said he’s excited to see the unique opportunity LB 289 will present to residential, commercial, and agricultural property owners to receive tax relief and see all districts more equitably funded by the state.
“This is not the state’s largest tax increase as respectfully, I disagree with the governor and others that have suggested, but rather this bill reflects one of the largest property tax reductions in our state’s history,” he said. “From a school board point of view, it takes some of the divide between running and funding the school in a responsible manner away.”
Mike Guenther, vice president of the Nebraska State Dairy Association, said his industry would welcome property tax relief and the more fair funding of rural school districts.
“LB 289 would start providing property tax relief in fiscal year 2019-20,” Guenther said. “This isn’t a drawn-out phase-in of relief. The property tax relief in this bill would start immediately and with the key structural changes, continue to deliver relief every year thereafter.”
Immediate relief, he said, is dire after many years of poor milk prices have driven the state’s dairy numbers down from 154 to 141 dairies in the past year.
Mark Spurgin, president of Nebraska Wheat Growers Association said property taxes are the largest input cost for the state’s growers who pay about 50 cents per bushel in property taxes.
“There’s no place to hide,” Nelson said. “It’s very important senators know a yes vote on LB 289 is a vote for tax relief for all property taxpayers and a vote no is a vote against property tax relief.” ❖
— Gabel is an assistant editor and reporter for The Fence Post. She can be reached at firstname.lastname@example.org or (970) 392-4410.