LB 289 is a bill from Sen. Lou Ann Linehan. She chairs the Revenue Committee. It is one of about twenty different bills a variety of Senators have introduced this session that address property taxes. A combined hearing of the Revenue, Education and Retirement Committees was held on LB 289 this past Wednesday. The hearing went on until 11:00pm. Most of the people testified in opposition to it because the bill would raise sales tax ½ a cent, and it does away with certain sales tax exemptions. Also this week, the Governor published an editorial in the paper that voiced his strong opposition to the bill calling it a “tax shift” from property tax to sales tax.
I am carefully evaluating LB 289. There is about $575 million of property tax relief in this bill. I have not seen this much money in a proposal to lower property taxes since I have been in the legislature. If history is any guide, I never will again. The bill does away with the Property Tax Credit Fund. This is the best guaranteed way agriculture property receives what little relief they do get right now, and this concerns many. The bill certainly is a tax shift, but shifting some of the funding responsibility for our K–12 schools off of property taxes and onto the Legislature to plan for is long overdue. As things are, I see a troubling and growing disconnect between the folks who mandate by law what the school districts must do (the Legislature) and the folks who have to pay for most it (the property tax payers).
Nebraska is currently 44th in the country in terms of state funding for K–12 schools. Forty-three other state legislatures appropriate a bigger portion of the funding for schools than we do in Nebraska. This created a huge over-reliance on property taxes to fund schools, and that is the main reason we are in the mess we are in.
Calls for spending cuts to “pay” for property tax relief ignore political reality. Myself and maybe twenty other Senators would support this approach. Sadly, that is not a viable option because the majority of the Senators in the legislature would not vote to cut spending to fund property tax relief.
School spending in Nebraska has also increased dramatically over the years, out-pacing inflation and other government spending. There is no constitutional limit to how much property taxes can be used to fund schools, so there is nothing stopping this problem from continuing to get worse. LB 289 addresses many of these problems, but the devil is always in the details. I urge my colleagues to devote themselves to this important work. We need to resolve our differences, address these important concerns, and pass property tax relief for Nebraska this year.
Please contact my office with any comments, questions or concerns. Email me at firstname.lastname@example.org, mail a letter to Sen. Tom Brewer, Room #1423, P.O. Box 94604, Lincoln, NE 68509, or call us at (402) 471-2628.