LINCOLN — The property tax plan unveiled Tuesday by Gov. Pete Ricketts and two key lawmakers was met with generally noncommittal responses from other lawmakers.
The plan focuses on keeping the lid on local government spending and state school aid.
It also would limit the growth in valuation of farm and ranchland.
Legislation to implement the plan is to be introduced Thursday, after the governor’s State of the State speech.
Ricketts said property tax relief is his top priority this year, based on the number of people who raise the issue during his travels around the state.
“This new legislation’s focus on structural property tax relief encourages fiscal accountability in local government,” he said.
State Sen. Mike Gloor of Grand Island, the Revenue Committee chairman, and Sen. Kate Sullivan of Cedar Rapids, the Education Committee chairwoman, plan to introduce the two-bill package.
Together the bills would:
» Tighten spending limits on cities, counties and other entities of local government.
» Tighten property tax levy lids by removing exceptions that governing boards can invoke without a vote of the people.
» Control growth in the school funding formula by limiting school budget increases.
» Cap the amount that the assessed valuation of farm and ranchland may increase statewide at 3 percent per year.
Sen. Paul Schumacher of Columbus, a Revenue Committee member, said the proposals appear to be a rough start to responding to Nebraskans’ property tax concerns.
But he said the details included in the actual bills will be key. Those details won’t be known until later.
Sen. Heath Mello of Omaha, the Appropriations Committee chairman, said he wants to evaluate those details before taking a position on the proposal.
“I’m open minded to some of the concepts in the bills,” he said.
Sen. Mike Groene of North Platte, an Education Committee member, said he gives the governor credit for trying to hold down property taxes.
But he said he prefers a different approach to restraining the growth of property tax valuations. Groene has offered an alternative in Legislative Bill 717, under which assessed valuations on all types of property would be based on the average of five years of sales, with the highest sale prices thrown out.
Sen. Jerry Johnson of Wahoo said he plans to propose the alternative of a three-year freeze on property tax bills. He questioned whether the governor’s plan would do enough.
“I don’t know if it’s solving the problem,” he said.
Ricketts said the package would benefit urban and rural property taxpayers alike, even though the cap on property valuation growth would only apply to agricultural property.
Owners of farm and ranchland have seen their property valuations climb steeply in recent years, along with land prices.
The bills would carry a price tag for future years because they would increase the amount needed for state aid to schools. The aid would be needed to fill in for lower agricultural property valuations.
He declined to say how much the bills might cost, saying that information will be part of his budget proposal. But he said the increase would not affect the current two-year budget period.
Sullivan said the proposed changes would increase accountability for local governments.
“This property tax package emphasizes the relationship between local governing boards and the taxpaying citizens they serve,” she said.
Gloor said the changes would build on the Legislature’s tax-relief efforts of recent years, including last year’s 45 percent increase in the state’s property tax credit fund, which boosted the total to $204 million annually.
The Revenue and Education Committees joined forces on a study of property taxes and school funding over the summer.
A key to the governor’s proposed changes, sponsors say, is that they would not have a significant impact on the state budget. The state faces a $140 million budget shortfall for the two-year budget period ending June 30, 2017.
Among other groups, Americans for Prosperity Nebraska, which advocates for limited government and economic freedom, promised to support the governor’s plan, saying it would provide property tax relief.
Renee Fry, executive director of the Open Sky Policy Institute, a Lincoln-based think tank, said she was concerned about possible unintended consequences of the proposals but said the institute would support the increase in state support for K-12 schools that the plan would be necessitate.
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