Gov. Ricketts seeks workable solution for property tax reform

Scotts Bluff County Commissioner Charlie Knapper (left) shares a photo with Nebraska Gov.Pete Ricketts during the annual Dignitary Tea prior to the Oregon Trail Days Parade in Gering.

GERING — Nebraska Gov. Pete Ricketts made a stop in Gering for the 98th annual Oregon Trail Days Parade. He also took some time to field questions from local media.

The main question was how the state plans to implement real property tax reform, as well as relief for the property owners paying the bill.

Finding a workable solution has been discussed in the Legislature for decades, but even after this year’s 90-day session wrapped up, the answer remains elusive.

The Legislature’s Revenue Committee has been working in the off-season to see if a bill can be hammered out for introduction during the 2020 session.

“I’ve met with several members of the Revenue Committee and your own (State) Sen. Stinner of Appropriations to share my thoughts,” Ricketts said. “I haven’t changed my opposition to increasing taxes to pay for property tax relief.”

Ricketts said he’d like to see a bill that accomplishes the Revenue Committee’s goals for property tax relief, but do it in a way that doesn’t raise people’s taxes.

The central issue is that the majority of property tax dollars go to support local school districts, so the question is always how the state allocates those dollars.

The current formula was created in 1990, called the Tax Equity and Educational Opportunities Support Act (TEEOSA). The formula calculates a school district’s ability to meet its own needs before providing equalization aid. Currently, only 69 of the state’s 244 school districts receive support.

Sen. Mike Groene of North Platte introduced legislation last session that would remedy some of the flaws in the TEEOSA formula.

The bill was introduced late in the session and Ricketts said there was insufficient time for a full review before it was debated. The governor plans to meet with Groene this summer to see how its provisions could be implemented into future legislation.

“I’m all in favor of finding ways to reform the TEEOSA formula,” Ricketts said. “Last session I budgeted $100 million for education but the Appropriations Committee only certified $65 million.”

He recommended the state use the $35 million difference for a per-student program to make sure all school districts are participating in the TEEOSA formula, which would be fairer. It would also address some of the problems state senators have with the formula.

Ricketts said the state will be limited in what can be accomplished, because the budget has been set for the next two years.

Another bill from State Sen. Steve Erdman of Bayard failed to pass, but a petition drive is currently underway to place it on the 2020 ballot.

Called the 35% Solution, the proposed legislation would rebate 35% of what Nebraskans pay in property taxes. The rebate would be applied to the state income tax.

“What they’re proposing is very similar to what I proposed in 2018 for a refundable tax credit, but I recommended the credit be phased in over time so we can manage it within the budget,” Ricketts said.

The 35% Solution would extend the full tax credit from the first year it becomes law. But if no changes in taxation are made, core government services could be impacted. That would include the growing state obligation under Medicaid expansion.

“While I support the idea, what’s being proposed would only lead to tax increases and more spending,” Ricketts said. “The easiest thing for the Legislature to do is raise taxes to cover that 35 percent credit.”

Ricketts said that regarding other pressing issues, the eastern part of the state is still dealing with the aftermath from severe flooding last spring.

“We still have 11 bridges out, but should have some temporary bridges installed this summer,” he said. “It will take until the fall of 2020 to make permanent repairs. Flooded roads and agriculture land in need of remediation will also take some time to complete.”

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