LINCOLN — Gov. Pete Ricketts told a legislative panel Thursday that he is willing to consider changes in his property tax proposal.
But he insisted that lawmakers need to do something to respond to the Nebraska taxpayers and citizens who are complaining about their property tax burdens.
“It’s important we get something done this year,” Ricketts said. “The people are mad. They’re demanding action.”
Only a few of those angry taxpayers, however, showed up at the State Capitol to speak in support of Ricketts’ proposal.
Instead, Legislative Bill 958 ran into a wall of opposition during a six-hour public hearing before the Revenue Committee.
Cities, counties, school districts, natural resources districts, community colleges and fire districts from across the state turned out to raise concerns about the proposal.
They argued that the measure would remove local control and hamstring local governments by tightening budget and levy limits.
The opponents also included some agricultural groups, who said the bill would not do enough to relieve the property tax burden on farmers and ranchers.
Ned Meier, a Grand Island-area farmer, offered a pessimistic take on the whole effort.
“I know you’re not going to solve it,” he said. “I don’t know how it’s going to be solved.”
Ricketts sounded a more positive note when he launched testimony in support of LB 958, which was introduced on his behalf by State Sen. Mike Gloor of Grand Island.
A companion measure, LB 959, was introduced by Sen. Kate Sullivan of Cedar Rapids, the Education Committee chairwoman.
Ricketts said the bills represent a balanced, incremental and measured approach to property tax relief.
LB 958 would cap statewide growth of farm- and ranch-land valuations at 3 percent annually. It also would keep a lid on local governments by removing some exceptions to their current spending and levy limits.
Ricketts said the bill represents one step toward his broader goal of reducing taxes in Nebraska. He promised to continue working on tax relief, including property and income tax, each year of his term in office.
Steve Nelson, president of the Nebraska Farm Bureau, while supporting the governor’s plan, echoed the need to do more.
He said the goal should be reform of how Nebraska pays for K-12 education, so that no more than 40 percent of the cost comes from property taxes.
Currently, property taxes pay about 57 percent of those education costs. The burden has fallen increasingly on farmers and ranchers as prices for ag land soared in recent years.
“What we have today is not sustainable,” Nelson said.
Other supporters included the Nebraska Cattlemen and the Platte Institute for Economic Research, an Omaha-based think tank.
On the other side, John Hansen, president of the Nebraska Farmers Union, also called for the state to put more money into schools to decrease their reliance on property taxes. But he rejected the governor’s plan as moving too slowly to address the steep rise in ag land taxes.
Other opponents said the bill would shift taxes to residential and commercial property owners and not necessarily reduce the property tax bills that farmers and ranchers pay.
Owners of property in more rural areas, with relatively little residential and commercial property to share the burden, could see little change in their tax bills. Local governments could raise their property tax levies to offset lower ag land values and keep their funding stable.
Many opponents said the changes proposed in LB 958 would squeeze local governments.
Virgil Harden, a Grand Island school administrator, was among those raising concerns.
He said the cap on ag land valuation would mean a $100,000 loss of revenue for the Grand Island district. The district could not recoup that money from other taxpayers because it is at the state-imposed levy limit.
Rodney Storm, the city administrator in Blair, said the proposal to tighten spending lids would hamper his city’s ability to save money for major projects. As an example, he said, Blair put money aside for three years to pay for the commitments it had made to attract Novozymes to the city.
LB 958 would put capital improvements, funds saved for equipment purchases and expenditures for interlocal agreements under the overall budget limit.
Steve Curtis, Omaha’s finance director, raised concerns about the effects on interlocal agreements, under which Omaha and other local government join forces to provide such things as 911 coverage.
Although the bill would allow local governments to exceed spending and levy limits with approval from voters, Curtis said every election costs $100,000 to $400,000.
Ryan Purdy, president of Mid-Plains Community College, said the tighter limits would not allow community colleges the flexibility they need when enrollments grow, as they typically do during slow economic times.
Despite the number of opponents to LB 958, Ricketts remained undaunted. He noted that the opponents were mostly local governments that would be affected by the limits, not the taxpayers who have been seeking relief.
The Revenue Committee took no action on the bill Thursday. The governor’s second proposal, LB 959, is scheduled to have a hearing Tuesday before the Education Committee.
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