LINCOLN — Small ball is how one Nebraska state senator described it.
A bill that offers incremental progress toward property tax relief with small changes to the school funding formula cleared the first round of debate Wednesday in the Nebraska Legislature.
State Sen. Mike Gloor of Grand Island used a familiar analogy when he said reducing the role of property taxes in funding public education can’t be done by “swinging for the fences.”
“Solving this problem requires constant changes ... bunts and singles,” he said.
Lawmakers advanced Legislative Bill 959 on a 38-0 vote but not before some senators suggested they would rather see a walk-off homer.
Property taxes on ag land, pushed by historic increases in land values, have increased by 80 percent or more over the past decade. Senators who represent rural districts said public school funding is the biggest component of a property tax system that needs reform.
“I don’t think there is any entity or industry in this state that has seen these kinds of property tax increases. It’s unsustainable,” said Sen. Curt Friesen of Henderson, who farms for a living.
The changes contained in the bill are projected to reduce property taxes by about $8.5 million, money that would have to be made up by the state’s general fund. That figure represents a small percentage of annual property tax collections by local governments, which reached nearly $3.8 billion in 2015.
The bill is an amended version of a proposal introduced on behalf of Gov. Pete Ricketts. The governor endorsed the new version, even though it does less than he originally wanted.
“It’s absolutely important,” Ricketts said Wednesday. “The people of Nebraska are demanding property tax relief.”
LB 959 is one of two proposals the governor wants to see enacted this session to provide property tax cuts. The second measure, on tap for debate today, would boost property tax credits by $30 million for farmers and ranchers.
The school funding measure was introduced by Sen. Kate Sullivan of Cedar Rapids, chairwoman of the Education Committee. She said the final version of the bill was the result of hard work and compromise.
“Is it perfection? Well, hardly. Are there some solutions? Partly,” she said during floor debate.
The bill would eliminate a law that takes away state funding from schools unless they set their levies at at least 95 cents. The change would allow schools to qualify for state aid if their levies are set below 95 cents.
The provision would increase state school aid expenses by more than $8 million per year.
Another change under the bill would tighten limits on a special tax levy that school districts can use to address health, safety and accessibility problems in school buildings. The bill would reduce the special levy from 5.2 cents to 3 cents, and would prohibit the funds from being used for new construction.
Sullivan said she could support the bill because it represents not only property tax relief but also an improvement in education policy.
Sen. Dave Schnoor of Scribner, a member of the Education Committee, said he could back the measure because it takes a step in the right direction, no matter how small.
“It doesn’t fix our problems, it’s not a solution and it’s not an answer to our prayers,” Schnoor said.
Lawmakers spent nearly three hours discussing the bill even though no senator spoke against it.
In part that was because Friesen offered an amendment that would have required the state to make aid payments of up to $4,500 per student to the 245 school districts.
He said no fiscal analysis had been done on his amendment, but Friesen estimated the cost would approach $400 million annually. The senator said he had no intention of taking the amendment to a vote, but he introduced it to start a discussion on the larger issue of property tax relief.
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