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Reforming Ag Property Taxes

By Governor Pete Ricketts

April 24, 2017

 

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Discussion on tax reform is underway in the Legislature.  Last week, senators started debate on LB461, the 2017 Nebraska Taxpayer Reform Act.  The discussion on the floor was thoughtful with many senators voicing support for dealing with Nebraska’s high tax problem.  This bill would make the most significant changes to our state’s property and income tax system in a generation by changing how we value ag land for taxation purposes and cutting income taxes for working families and Main Street businesses.  If you want to see tax relief this year, contact your senator.  You can find their information at www.NebraskaLegislature.gov.

 

As the Legislature began consideration of this proposal, there was a significant focus on what the proposal does to relieve high ag land property taxes.  Right now, ag producers across the state are feeling the impact of high property taxes and low commodity prices.  LB461 proposes to move assessments for ag land from a market-based system to an income-potential approach, helping valuations to better reflect the income of Nebraska’s ag producers.  This is major structural change that would have reduced total ag land property valuations by 12 percent statewide if it had been in effect in 2017.  If levies had stayed the same, this would have resulted in $147 million of property tax relief for Nebraska farmers and ranchers in 2017.

 

This builds on the work the Legislature and I have done the last two years on property taxes.  Working with senators in 2015, we increased the property tax credit relief fund by over 45 percent, and returned over $400 million in direct property tax relief to taxpayers.  In 2016, we added an additional $40 million over two years directly targeted at ag property taxpayers, and provided incentives for responsible budgeting by our school districts.  Late last year, the Revenue Department issued guidance on how to identify property sales that distort market information used for tax purposes.

 

Some special interest groups have argued that LB461 should not include any income tax relief.  I believe that doing both property tax and income tax reform is key to bringing together urban and rural senators in the Legislature.  Right now, you can see the urban and rural divide playing out.  Some urban interests want farmers and ranchers to give up tax breaks the Legislature has granted them in the past.  Others believe the Legislature should solely focus on property tax relief without doing anything on income tax to help Main Street.

 

While this bill is not everything that urban or rural senators may want, it contains reforms that are key to growing Nebraska.  Right now, USA Today ranks us fifth highest in the nation for property taxes, and the Tax Foundation ranks Nebraska 14th highest in the nation for income tax collections per capita.  The 2017 Nebraska Taxpayer Reform Act will not only put more money back into the pockets of working Nebraskans and small businesses, but it will also make Nebraska more globally competitive.  It is important that urban and rural policymakers come together and do what’s best for the whole state. 

 

In the coming days, senators will have a choice when they vote on LB461.  When it comes down to it, a vote on tax reform will separate taxpayer advocates versus lobbyists.  Lobbyists and special interests will try to block tax reform because they want to spend more of your money.  Getting tax reform done won’t be easy.  If you want to see tax relief this year, call your senator and let them know.  They need to hear from you right away.  You can find all their contact information at www.NebraskaLegislature.gov.   As always, I hope that you’ll contact me with your concerns.  You can reach my office by emailing pete.ricketts@nebraska.gov or calling 402-471-2244.

 

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