As could be expected, Sens. Mike Groene, Lou Ann Linehan, and John Lowe came to our recent North Platte Property Tax Reform Town Hall prepared with plenty of strong appeals to the virtues of limiting government spending and taxes.
But here are five statements the panelists made that may have broken new ground in Nebraska’s property tax reform debate.
1. “We’ve got one more chance…If we can’t get this passed in this next session, it’s up to the people of Nebraska.” — Sen. John Lowe on a property tax ballot initiative.
Trust in the Legislature to act on property tax reform is clearly waning, even among senators representing Greater Nebraska. Sen. Steve Erdman has been an initiative proponent for more than a year, and was in attendance at the town hall gathering petition signatures. But also on hand were Sens. Tom Brewer, Dave Murman, Steve Halloran, and Tom Briese, who have shown varying levels of support for the initiative as backup plan.
Sen. Mike Groene also said at the town hall that he believed a ballot initiative was necessary in the event that the Legislature did not act in the 2020 short legislative session. Supporters have until July 2020 to collect the needed signatures.
“I tell everybody I meet ‘sign the petition, put it on the ballot.’ Is it the best policy? It will be the best policy if it passes. But we need it on the ballot as a rock in a hard place to force the Legislature to wake up and do something,” Groene said.
2. “I supported a sales tax increase, which was wrong. That’s a tax increase, folks. We don’t need tax increases.” — Sen. Mike Groene
Though the North Platte area senator is known to be deeply conservative by his colleagues, Sen. Mike Groene has a populist streak that has put him in the position of filibustering previous tax cut proposals and recently advocating for state tax increases to address his district’s property tax burden.
At the town hall, though, the senator acknowledged to his constituents that he considered his most recent approach to raising other taxes to cut property taxes to be a mistake.
“You want it so bad that you let the people down,” Groene said.
“We need to rearrange our budget…get rid of some exemptions so everybody is treated fairly in our tax policy.”
This statement may provide some indication of what a forthcoming legislative property tax reform proposal could look like.
3. “Our goal is, and the governor understands this goal, that by December 15 we have a bill that we can get out of the Revenue Committee 8-0, and the governor will be supportive of.” — Revenue Committee Chair Sen. Lou Ann Linehan
Revenue Committee members and the governor were at odds for much of the 2019 legislative session. The committee’s property tax reform proposal included eliminating sales tax exemptions and varying types of tax rate increases at different stages of debate.
The governor has previously said he would oppose those measures and has held several news conferences campaigning against Revenue Committee proposals. That left senators in the position of needing to carry a bill through four rounds of debate, earning 33 votes to overcome a filibuster, and holding onto 30 votes to override a potential gubernatorial veto.
This year, there is some indication that the Revenue Committee will try to coordinate with the governor on a shared plan, and Sen. Linehan is making an appeal to Governor Ricketts to accept elimination of sales tax exemptions as part of that package, which would include additional limitations on local political subdivision taxing authority.
For our fourth surprising statement, we’ll double up with comments from the chairs of the Revenue and Education Committees:
4. “We’re at about $370 million in state revenue going out to counties to keep property taxes down, and it’s not working.” — Sen. Lou Ann Linehan
“I told the governor, I said, ‘you’re a fiscal conservative and so am I, how can I support the property tax credit fund?’ That’s the old adage, you’re throwing money at a problem.” — Sen. Mike Groene
Since 2007, the Nebraska Legislature’s largest property tax relief policy has been a fund used to subsidize property tax bills with state income and sales tax dollars. In theory, the state would pick up some of the local property tax bill to lighten the local burden on your wallet. In practice, however, property taxes have continued to rise to higher levels than ever before, even with the credits.
Though well-intended, the Legislature approved a proposal from the governor to increase spending on the property tax credit fund in 2019 that is already appearing to be tenuous for some taxpayers.
In the North Platte town hall discussion, Sens. Linehan and Groene indicated that the tide may finally be turning against the property tax credit fund in the Revenue Committee. The senators suggested that the funds currently distributed through the property tax credit relief fund, the homestead exemption, and the personal property tax exemption might be better used as part of a larger property tax reform program that placed additional limits on the local governments that receive those funds.
Though taxpayers are rarely impressed by the property tax credit fund’s impact on their tax bill, the policy remains more popular among ag groups, since it is a guaranteed source of state money that is distributed based on assessed valuations. There is also a small portion of the fund that is dedicated only to agricultural property.
5. “I think [LB103] is very clear. We had hearings on it, we explained that this was our intent...There has to be a vote if they’re going to raise their taxes.” — Sen. Lou Ann Linehan
Though a comprehensive property tax reform bill did not pass in 2019, the Legislature did enact Sen. Linehan’s LB103, which requires local political subdivisions to hold special public hearings and board votes if elected officials want to increase property tax collections as a result of rising valuations.
Prior to that vote, tax levies are slated to be automatically reduced by the same amount as the overall increase. Under previous law, a property tax increase could be adopted merely by passing a new budget under the current property tax levy.
Because the Unicameral adopted LB103 as an emergency measure, it took effect immediately, and applies to local government budgets that are adopted this year. But already, there are questions about whether local governments understand the requirements of the law and will properly comply with it.
“I talked to one rather large subdivision yesterday who said ‘Well, we don’t really have to do that,’” Linehan said.
“It’s very clear—got, like, 45 votes. If you want to take advantage of the total valuation increase, you have to have two hearings. You have to have a hearing with the public on your budget, and then you have to have another hearing on the tax taking,” Linehan said.
In fact, the bill received 47 votes on final passage, with none opposed. Sen. Linehan encouraged taxpayers to attend local LB103 hearings and to make their views known on whether local property tax valuation increases should be adopted into tax increases.