Will caps lower Nebraska property taxes? Think tank execs weigh

As county boards begin taking up protest hearings over high property values across Nebraska, officials and policymakers disagree about how best to soothe frustrated property owners.

In June, Gov. Jim Pillen went toe to toe with county assessors, accusing them of being behind high property valuations and taxes. Jon Cannon, executive director of the Nebraska Association of County Officials, objected, arguing that state statute and policies at the state’s executive branch guide assessors in how they conduct their work.

“I think the frustration is sometimes unfair towards the assessors,” Jim Vokal, chief executive officer of the right-leaning Platte Institute, said. “They are doing what state law requires them to do, and that is to value property at market value.”

Herein lies the rub for the Platte Institute. Vokal said other states have caps on property tax levies and even lower property levies to offset rising market rate values in order to keep taxes low. Nebraska’s levy caps, he argued, are not strong enough.

“The high property tax situation is the result of the decisions made by elected officials of the various political subdivisions,” Vokal said.

He gave public schools as an example, saying they represent 60% of property tax spending. The Platte Institute believes that those bodies should have less authority to levy property taxes in order to raise money for services. He applauded the Legislature for, beginning in fiscal year 2024-2025, taking levy power away from community colleges in exchange for funding the schools through the state.

“You have to make sure that those political subdivisions and those elected officials don't still have the ability to raise property taxes if you're going to send money to the state,” Vokal said.

Rebecca Firestone, executive director of the left-leaning Open Sky Policy Institute, does not share Vokal’s sentiments.

“We see significant evidence in a number of states that have established caps …basically create different tax rates for nearly identical properties,” Firestone said. “For example, a new family moving onto a residential street could be paying substantially more than their neighbors, whose home has an almost identical market value because assessment caps incentivize homeowners to stay in their homes to continue receiving a preferential property tax amount.”

Caps also restrict municipalities from raising money needed for essential services, Firestone argued. To solve the property tax problem, Firestone said the state should instead build more housing and essentially expand the property tax base to help ease the burden on current homeowners.

“Concern about property taxes, and how quickly property taxes may be increasing, are only relevant for people who currently own or rent existing property,” Firestone said.

Firestone pointed to the state’s growing budget deficit as part of the problem. From Open Sky’s perspective, the state more or less was hamstrung by 2023 legislation that lowered individual and corporate income tax rates, which have reduced state revenues.

“When the state chooses to be in the structural budget deficit that we are currently facing, then everything becomes more difficult,” Firestone said.