A Golden Opportunity for Property Tax Relief
By Governor Pete Ricketts
March 8, 2021
Governor’s official photo here.
Since taking office as Governor, property tax relief has been my top priority. That’s because high property taxes continue to be the number one concern I hear from Nebraskans. This legislative session, Senators have a golden opportunity to give Nebraska families the relief they need. Nebraska’s economy has been resilient through the pandemic, resulting in strong tax revenues. This sets the stage for the Unicameral to deliver major property tax relief.
Nebraskans from Gretna to Gothenburg are feeling the pain of burdensome property taxes. In agriculture, high property taxes erode margins and threaten the financial health of our family farms. This has a profound effect, not only on rural communities but also on our overall economy because agriculture is our number one industry. In our cities, property taxes are imperiling the American dream of home ownership for some and the dream of retiring for others. Family budgets simply aren’t keeping up with the rapid rise in property taxes. High property taxes are also hurting small businesses on main streets and weigh on future investment, as job creators face the challenge of ever-increasing costs of doing business.
Data shows that Nebraskans are shouldering a heavy property tax burden. According to WalletHub, Nebraska has the 8th highest property tax rate in the nation. Our effective rate of property taxation is higher than in any neighboring state. For example, the median national home value was $217,500 in 2019. In Nebraska, owning this home would cost an average of $3,754 per year in property taxes. The same house would only have $1,319 of annual property taxes in Wyoming and $1,113 in Colorado. The bottom line is that Nebraska’s families are paying thousands of dollars more each year in property taxes than families in surrounding states.
Since their operations involve lots of land, our state’s farmers and ranchers especially feel the pain of high property taxes. In a paper published in 2019, UNL Professor J. David Aiken calculated the property tax burden of Nebraska’s ag producers and compared it to other states. Property taxes averaged 30.7% of net farm income in Nebraska from 2015 to 2017—the most recent years included in the study. That was 88% higher than the national average over that time period. Our state’s high property taxes are putting Nebraska’s hardworking farmers and ranchers at a competitive disadvantage, which is hurting our state’s largest industry.
Local government property taxes have gone up 4.3% per year over the past decade in Nebraska. That may not sound like much, but when compounded over 10 years, it’s a 51.8% increase. By comparison, income grew 48% and inflation just 18.7% during the past decade. With property taxes going up faster than income or inflation, Nebraskans are mad.
To address this problem, we’ve made strides to deliver property tax relief in recent years. From 2015 to 2019, I worked with the Legislature to nearly double the Property Tax Credit Relief fund from $140 million annually to $275 million per year. Last year, we celebrated a landmark property tax relief bill—LB 1107. It created a refundable property tax credit that Nebraskans are able to claim for the first time when filing their 2020 state income taxes. The refundable credit is providing $125 million in relief for the 2020 tax year, and will increase as our State continues to grow.
In January, I proposed a budget to deliver a total of $1.36 billion in total property tax relief over the next two years. Last month, we received a better-than-expected revenue projection from the Nebraska Economic Forecasting Advisory Board. The board now projects state revenues to be $462 million higher than its initial forecast. In light of this news, Senators now have the opportunity to deliver $1.77 billion in property tax relief over the next two years. This would be a significant amount of relief for Nebraskans, and it would help our state continue its strong growth.
As the state works to deliver relief, it is also critical that all levels of government control spending to ensure it ends up in people’s pockets. We have to make sure that the state tax relief doesn’t simply result in new spending by local political subdivisions like cities, counties, community colleges, natural resources districts, and schools. Here’s how the process has worked in the past:
- Local property taxes go up faster than income and inflation.
- Nebraskans pay higher property taxes.
- The State delivers property tax relief.
- Local property tax bills continue to go up.
- Taxpayers see no real relief, because the relief from the State is needed to cover the higher property tax bills they get from political subdivisions.
It’s time to stop this cycle. I have proposed a budget to limit state spending to 1.5% per year. I’m also working with the Legislature to take action to limit the allowable growth of local government spending to 3% each year. This commonsense limit will protect Nebraskans from seeing their tax bills increase faster than their family budgets can afford.
It’s time for action at the State Capitol. Nebraskans have been bearing the burden of high property taxes for far too long. Call your State Senator this month to urge them to vote for a budget that maximizes property tax relief and to limit local government property taxes. You can find their information at www.NebraskaLegislature.gov. If you have questions about the property tax relief in my budget proposal, email email@example.com or call 402-471-2244.