Legislature gives property tax measure first-round approval

The Nebraska Legislature gave first-round approval Monday to a bill supporters say would relieve people from the burden of high property taxes, but which critics contend doesn’t address underlying issues.

The bill advanced Monday tries to hold down property taxes, which are assessed by local political subdivisions to, pay for services likes schools and city and county government. The proposal does so, in part, by using state revenues – primarily from income and sales taxes – to increase two existing programs that reimburse property owners for part of what they pay in property taxes.

One program – the property tax credit fund – gives taxpayers a credit worth just over $100 per $100,000 on their home’s tax value, or just over $125 per $100,000 on agricultural land. The bill would increase that by nearly 80 percent by the end of the decade, at an additional cost to the state of about $247 million.

The other program gives property owners a an income tax credit equal to about 30 percent of what they pay for schools and community colleges. That program currently costs state taxpayers about $560 million a year, and its growth is capped at 5 percent per year. The proposed tax bill would remove that cap, and let the increase grow by the same rate as tax valuations. Sen. Tom Briese estimated that would cost the state an additional $9 to $10 million a year.

Sen. Wendy DeBoer offered an amendment to keep the 5 percent annual limit on cost increases in place. She said future Legislatures could fund the program, but if they do so, it should be a conscious decision.

“This is just talking about whether or not we should let things go on autopilot in what I think is perhaps a destabilizing way, to go up at an exponential -- potentially even –increase,” DeBoer said.

Briese argued for removing any limit on future increases in the program.

“Why do we want to remove that cap? To provide a little extra tax relief for everyday Nebraskans. It's really designed also to protect Nebraska taxpayers,” Briese said.

Briese argued that if the 5 percent cap stayed but property valuations rose faster, taxpayers could slowly lose ground on the relief they’re getting from the program.

Sen. Steve Erdman said even with that relief, property taxpayers are still losing ground.

“We spend thousands of hours, cumulatively, talking about how to decrease the amount of increase. This is a bandaid on an amputation,” Erdman said.

Senators defeated DeBoer’s attempt to keep the 5 percent cap on a vote of 31-13.

There was also debate over another part of the bill, designed to limit increases in tax revenue received by schools to 3 percent a year, with certain exceptions.

One of those exceptions allows voters to approve increases greater than three percent, but only if 60 percent approve an override. Sen. Danielle Conrad said that’s too big a burden, “setting a very, I think concerning precedent to require a vote of the people to be anything more than a simple majority. That just flies in the face of our democratic system. It is at odds, and out of alignment with, how we handle school bond issues and other ballot initiative and referenda, or candidate and electoral elections writ large,” Conrad said.

However, senators rejected several amendments that would have lowered the popular vote requirement.

Sen. Megan Hunt objected to the idea, promoted by supporters of the bill, that lowering property taxes would help attract and keep people in the state. Hunt, who’s 36, said that wouldn’t work for many people her age.

“Most of my Millennial and Gen Z peers don't own any property. I don't own any property - not because I don't want to. Not for lack of trying. My rent per month is more than a mortgage would be, but I can't afford a down payment. So I'm just renting forever and there are so many people in that same situation, Hunt said.

But Briese insisted the bill will be helpful.

“The entire package that we're talking about here or this component of the big package… is going to provide substantial property tax relief for everyday Nebraskans, but it's still going to protect the ability of our K-12 schools and our community colleges to do their jobs,” he said.

Senators voted 41-1, with only Hunt opposed, to advance the bill from the first round of debate.