Nebraska Sen. Friesen says his bill will bring property taxes down and still fund education
February 15, 2019
The bulk of Nebraska's property taxes have long been shouldered by agriculture producers and with the new legislative session, comes Sen. Curt Friesen's LB 497 to help ease the burden.
The bill provides equity across school districts, including those in districts with a large amount of agricultural land, and generates additional revenue through eliminating exemptions for services including haircare and dating and escort services.
Property taxes and school funding were priorities for Friesen, he said, and the bill stems from four years of work toward a solution.
"In the Nebraska Constitution, it talks about the state's obligation to provide for the free instruction of our K through 12 and so now we have an opportunity here with this bill to make sure every student, no matter where they live or which school district they're in, does receive some of that state funding," Friesen said.
Over a three-year period, funding would be distributed to all school districts in the state with the intention of bringing equity to the equation. According to Jay Rempe, Nebraska Farm Bureau, the current state aid, TIOSA aid, is distributed at a different rate to different districts as a percentage of their state aid.
"Sterling Public Schools only gets 0.6 percent of its share of basic funding from TIOSA aid, whereas Auburn, which is in the same legislative district, gets close to 26 percent," Rempe said.
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With the proposed changes, all districts in Nebraska would receive 50 percent of their basic education funding.
The bill also adjusts the state aid rate according to the Local Effort Rate, another move to lend equity. Additionally, the bill adjusts the state aid formula so the districts with large land bases would be more likely to receive state equalization aid and lowers the valuation of that agricultural land over a period of three years to 40 percent of value.
"The increases that we've seen of state ag land taxes that have been paid, this would help bring that down and, in the future, help keep it from getting back to where we are today," Friesen said. "It puts a little bit more of that burden back on the residential, which I'm a part of, too."
According to Nebraska Farm Bureau, statewide property tax collections on agricultural land have increased by 152 percent from 2007 to 2017.
Meant to lower property taxes without increasing school spending, the bill establishes an annual maximum property tax authority for each district based upon the amount of state aid received. The bill also generates an additional estimated $523 million annually for allocation to schools to replace and lower local property taxes. This is accomplished through repealing state tax exemptions on real property maintenance, motor vehicle maintenance, dry cleaning, pet services, non-business legal services, food consumed at home (SNAP excepted) storage, personal care (hair, massage, tattoos, nails, etc.) travel agencies, zoo admissions, and dating and escort services, which alone account for $287 million in lost revenue. Additionally, the state's cigarette tax increases by $1.50 per pack, an estimated revenue of $98 million, and increases the alcohol tax for an estimated $121 million. The bill also repeals the $10,000 personal property tax exemption for an additional $17 million of revenue.
The state budget would not be impacted by the additional state aid until FY2020-21, but the revenues collected the year prior will be allocated to the state's cash reserve fund in FY2019-20.
The bill is supported by the Nebraska Agriculture Leaders Working Group including Nebraska Cattlemen, Nebraska Corn Growers Association, Nebraska Farm Bureau, Nebraska Pork Producers Association, Nebraska Soybean Association, Nebraska State Dairy Association, and Nebraska Wheat Growers Association. ❖
— Gabel is an assistant editor and reporter for The Fence Post. She can be reached at email@example.com or (970) 392-4410.