‘How ya gonna pay for it?’
April 27, 2018
This is what I hear every time someone brings up the subject of out-of-control property taxes. Of course they are referring to how the legislature would appropriate sales and income tax revenue to pay for a portion of what property taxes currently pays for.
This means how our 244 K-12 public school districts are funded. Right now, property taxes in Nebraska pay about 60 percent of the funding for public schools. There are over 14 school districts in my legislative district. If you take out the schools that receive state aid, the average amount of funding derived from property taxes for the remaining schools is 72 percent. The national average is about 40 percent.
Nebraska has the fifth highest property taxes in the country because we don't appropriate near enough sales and income tax revenue to fund K-12 education. We are almost dead last in the country, 48 other states appropriate more sales and income tax revenue for K-12 education than we do. The problem persists because the legislature won't compromise. The solution has to be a combination of three things. Spending shifts that shut down and take revenue from other government programs (to attract conservative votes). New revenue generated from ending certain sales and income tax exemptions (to attract liberal votes). Also limits need to be considered on a school district's ability to assess and levy property taxes (to prevent the problem from ever happening again). I favor a balanced approach where one-third of the funding for our schools comes from each of the three sources of revenue.
No idea by itself has 33 votes to break a filibuster, so year after year deadlock ensues, both sides blame each other for the impasse, and the property tax problem continues like it has for over 40 years. Closing down an entire agency of state government and furloughing state employees, for example, or an out-and-out increase in a sales or income tax "rate" are both poison pills for either side to swallow. The cuts and new revenue compromise will have to be very nuanced and the product of intense negotiations with all the stakeholders at the table. In the end, both sides will have to hold their nose to vote for it. No one will like it, but it's the only way to get to 33. The people may very well force this compromise to happen if they pass the ballot initiative this fall.
Conservatives have to understand that the political composition of the legislature will never allow spending cuts to be the only way to fund property tax relief. Liberals have to understand that the political composition of the legislature will never allow new taxes to be the only way to fund property tax relief. Both sides have to compromise and agree to a little of both.
I doubt my idea to call a special session will attract 33 senators to sign-up by the deadline, April 23. Nonetheless, the 12 senators who have joined me thus far form a nucleus of those who are dead serious about this problem. They have each shown leadership. There is interest in forming a working group over the interim, and developing legislation for next session. My goal is to have this bill be LB 1. It needs to be the first one referenced. It needs to be the first committee hearing. It needs to be the first bill voted-out of committee. It needs to be the first bill put on the agenda for floor debate. It's clear the speaker is serious about this issue too, so I would hope he would designate this bill as a "Speaker Major Proposal" so it has some procedural advantages. I want to devote the session to this before we have prairie dog debates or abortion fights. Whether the people pass the ballot initiative or not, this must happen before we spend days on end arguing about community gardens, medical marijuana or self-driving cars. We spent less than two days debating property taxes this session. Frankly, that's the beauty of a special session — it has to be about a single subject and nothing else.
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One of the taxes I could vote for to help lower property taxes would be on wind energy. There is about 1,300 megawatts of wind energy generation installed in Nebraska (and more being built all the time). It makes electricity about 40 percent of the time. About 4.6 million megawatts of electricity is made by wind energy in Nebraska each year. The private operators of these things make $23 in federal tax credits per megawatt hour. That comes to about $106 million of our federal tax dollars going to the private wind energy companies over and above what they make selling the electricity. If we tax them at $10 per megawatt hour, for example, we'd get about $50 million we could put towards property tax relief. It's worth noting wind energy "costs" our public utilities money which ends up on your bill. Our electrical transmission system is built to distribute electricity to serve demand (load) not "export" the surplus electricity made by wind energy. Without the need to export surplus wind energy, things like the R Line project wouldn't be needed. This cost on our electrical infrastructure should be paid for by the private wind developers. As it is, we are privatizing profits by socializing the cost. There's more than one reason to ask wind energy to pay their own way. Asking them to help pay for public education is a good idea. ❖
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