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The Long Game on Property Taxes

Last week, I delivered my second State of the State address to the Unicameral, and then I went on the road for 10 statewide stops to talk directly with Nebraskans in South Sioux City, Columbus, Grand Island, Hastings, North Platte, Sidney, Scottsbluff, Alliance, Valentine, and Fremont.  Not surprisingly, property taxes were the top issue again, but this time there is an increased sense of urgency to see progress.

Many Nebraskans continue to be concerned about their options as property taxes continue to rise.  For example, Mary Lou in North Platte showed me this year’s property tax bill.  In 2015, her taxes went up almost 36 percent year over year on top of a 20 percent increase from 2014.  If property taxes continue to increase at this pace, families like Mary Lou’s may be forced to sell land their family homesteaded generations ago—just to pay their tax bill. 

This isn’t just a rural or agricultural issue.  Valuations are on the rise for commercial and residential property as well.  Many Nebraska taxpayers are on fixed income and have no ability to manage fast-paced valuation increases.  In some cases, the American Dream of owning a home is becoming more difficult for hardworking families.  Statewide property valuations from 2003-2013 increased by about 77 percent.  With ag land values rising even more rapidly than residential, property taxes on farmers and ranchers during the same time period increased by 137 percent. 

As a point of reference, property taxes make up about 40 percent of total taxes paid in Nebraska, while sales and income taxes combined come out to over 50 percent.

Property tax valuations are based on a three-year rolling average of a property’s actual value.  The rolling average is an attempt to prevent dramatic increases based on an isolated economic event.  Practically, this also means that if values rise rapidly for a couple years, and then level out or fall, the annually assessed valuation may still increase during years three, four, and five until the highest values are removed from the average.  While we all feel the pinch of increased property taxes, ag  producers, who are seeing a down trend in commodity prices, are still experiencing a significant increase in property taxes each year.  This reality has families like Mary Lou’s facing the possibility of literally losing their family farm.  The economic pressure experienced by the ag industry, which represents 25 percent of the Nebraska economy, impacts all of us.

Property taxes have been a major focus of my policy initiatives since I’ve had the honor of serving as your Governor.  Last year, we were able to provide $408 million in direct dollar-for-dollar property tax relief to Nebraskans through the Property Tax Credit Relief Fund, an over 45 percent increase from previous budgets.  While it was important to provide immediate relief, we must do more.

It is a challenge for state officials to take on the property tax problem directly because property taxes are imposed and collected by your local government including cities, counties, school districts, natural resource districts, community colleges, and educational service units.  State officials are limited to determining the parameters for local collection.

This year, I’ve worked with Revenue Committee Chairman Mike Gloor and Education Committee Chairwoman Kate Sullivan to propose a property tax relief package to make structural changes and begin to provide long-term relief through fiscal restraint.  Our bill will tighten spending and levy limits and limit the statewide aggregate growth of agricultural property valuations to three percent.

The $408 million in direct tax relief in the budget the Legislature and I agreed upon is significant, but property tax relief continues to be a priority because we can do more.  My property tax relief package encourages fiscal discipline, transparency, and accountability in local government, while maintaining local control over budgeting decisions.

We are working on your behalf at the state level, but we need your help at the local level.  Here are a few suggestions for how you can help support property tax relief for your community:

Consider attending budget meetings for local government and share your property tax bill, urge fiscal restraint in budgeting, and look for ways to achieve tax relief by lowering the levy.  You can find information about how to contact local government by visiting some of these websites:

You may also contact your state senator to urge them to support the property tax package introduced at my request by Chairwoman Sullivan and Chairman Gloor.  You can find their contact information at www.NebraskaLegislature.gov.

If you have any questions about how property taxes are levied or the tax relief package we are working on this legislative session, please contact my office by emailing pete.ricketts@nebraska.gov or by calling 402-471-2244.  I look forward to hearing from you!

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