Anger Over Property Taxes Collides With Arguments About Local Needs

Jan. 27, 2021, 5:39 p.m. ·

Gov. Pete Ricketts testifies in the Legislature Wednesday (Photo by Fred Knapp, NET News)

Listen To This Story

Anger about rising property taxes was met with arguments about local government needs in a public hearing Wednesday about proposed tax limits.

The main plan under discussion was a state constitutional amendment that would limit property tax increases by local governments to 3 percent per year. Gov. Pete Ricketts supported the proposal. Ricketts said the state has made many efforts over the years to limit property taxes, but they’ve continued to increase.

“This is something that makes people mad. And why is it? Well because if you look at the numbers over the last 10 years you’ll see that income growth in Nebraska over that 10 years has been about 48 percent. Inflation over that 10 years, cumulative, has been about 18 percent. Yet property taxes have grown at nearly 52 percent,” Ricketts said.

Doug Oertwich, a farmer, used an analogy to illustrate what he said was the flaw in attempts by the Legislature to provide property tax relief.

“To keep giving property tax relief without controlling spending is much like pouring water into a bucket with a hole in the bottom. You can keep pouring in the water, keep pouring in the relief, but until you cap the hole in the bottom, we’re getting nowhere,” Oertwich said.

Sen. Lou Ann Linehan, sponsor of the constitutional amendment, said the state is providing close to $2 billion a year in property tax relief via the property tax credit fund, a new income tax credit passed last year, state aid to schools, and the homestead exemption.

“That’s a lot of money folks, where we’re picking up the tab with no control,” Linehan said.

Linehan’s proposal would limit local governments, including schools, cities and counties, to collecting no more than three percent more in property taxes any one year than in the previous year. It would contain exceptions for growth in property values due to new construction, as well as for voter-approved bond issues and levy overrides.

Dennis Schleis of Omaha supported the proposal, saying high property taxes are preventing people from moving into the bigger houses they want. And Kent Thompson, a commercial real estate investor, said taxes are actually driving people away.

“Taxes are just fleecing our tenants left and right. We get all sorts of complaints every year when we go back to collect the taxes back from our tenants. We’re fleeing and we’re seeing a lot of people fleeing the state of Nebraska,” Thompson said. He also indicated people were not investing in real estate because taxes are so high

Lynn Rex of the League of Nebraska Municipalities objected to putting a three percent limit into the constitution, where it could not be changed quickly if inflation heated up.

“Since 2000 the rate of inflation has grown over three percent five times – 25 percent of the time…Since 1914, it’s been 43 times over three percent. You have no flexibility to deal with issues like this,” Rex said.

A separate proposal by Sen. Tom Briese would put the same tax limits into state law, which can be changed every year by the Legislature, instead of in the Constitution, which requires voter approval.

Dennis Meyer, budget and fiscal officer for Lancaster County, also opposed the proposal. Meyer got into an exchange with Sen. Joni Albrecht after he pointed to one year when the county raised property taxes by 12 percent after voters rejected a bond issue for a new jail.

“They voted it down. So we went a different direction,” Meyer said.

“And did it anyway?” Albrecht asked.

“And built it anyway. We had to,” Meyer replied.

“You can say you have to. But I’m here to say I’ve sat in that same chair as a county commissioner and when you take it to a vote of the people, whether you sit on the city council – we had a police station that we took to a vote of the people and they said no -- a resounding no. We were spending too much money,” Albrecht said.

Meyer also argued that even if they didn’t need it, local governments would be tempted to increase property taxes 3 percent every year in order to have a big enough base to handle large unexpected expenses when they did come along. Senators suggested that could be handled by changing the annual limit to a two-year or five-year average.

Joey Adler of the Holland Children’s Movement also opposed the bill, saying it would hurt children.

“The Holland Children’s Movement believes taking away control from local school districts and other subdivisions to make decisions and provide for the resources they need is an irresponsible approach to addressing the property tax issue in Nebraska – one that will only be harmful to our communities and children,” Adler said. “According to the Nebraska Voters Outlook, which is research done by the Holland Children’s Institute in 2019, 59 percent of Nebraskans say the state is currently underfunding education and believe that is why property taxes are high.”

Renee Fry of the Open Sky Policy Institute argued the bill would hurt schools because while the property taxes they collect would be limited, state aid would still decrease as property values rise.

Opposing the measure for a coalition of seven mid-sized Nebraska cities, former state senator and Lincoln Mayor Don Wesely urged senators to put the anger at property taxes in historical perspective.

“I understand the property tax pressure you’re under. I just heard a lot of people testifying on their frustration and anger about that. That frustration and anger has been here as long as we’ve had taxation,” Wesely said.

Whether that frustration and anger will motivate senators to take further action is one of the central questions of this legislative session.

Correction: An earlier text version of this story misattributed a quote from an official of the Holland Children's Movement.The statement was made by Joey Adler.