The writer, of Omaha, is chief executive officer of the Platte Institute.
Nebraska’s property tax burden is rising unsustainably, jeopardizing our state’s future. Agriculture can’t continue to forgo such a large share of its income just to pay property taxes.
But as a former Omaha City Council member, I can attest that property taxes are not an issue just for farmers and ranchers. As housing prices rise, homebuyers and renters also need more certainty about the cost of the roof over their heads.
In January, a nearly new Revenue Committee convened in Lincoln, and senators on the committee commendably put party politics aside to offer property tax reform proposals to the full Legislature.
However, the Legislature’s filibuster caused their proposals to fall short of the needed 33 votes.
While senators made a well-intended addition to the state’s property tax credit relief fund, a number of local political subdivisions are already consuming those funds by raising property tax rates and taking windfalls from increasing property valuations.
Patience is wearing thin. Many Nebraskans are skeptical that the 60 legislative days scheduled for next year will be any better for taxpayers than this year’s session.
An increasing number of constituents and senators are supporting a property tax ballot initiative. The proposed initiative would write a 35% annual rebate of real property taxes into the state constitution. It would be up to future Legislatures to decide how to pay for that change, or whether to pair it with additional limits on property taxes.
Though the Platte Institute does not support the policy behind the ballot initiative, we appreciate the campaign’s efforts to add urgency to the property tax debate. The campaign is gaining steam, and Nebraskans should take it seriously.
It is not difficult for me to envision Nebraskans voting for the initiative despite its flaws if they are not provided with a compelling alternative.
Time is not on the Legislature’s side. But senators do have one advantage they lacked in the previous session. They are no longer starting from scratch on formulating a policy. The Revenue Committee plans to present a new property tax reform plan by December.
This could allow debate on property tax reform to begin during some of the earliest days of the 2020 session.
More senators on the Revenue Committee are now moving against including increases in state tax rates in their final proposal. While that is a good thing for Nebraska’s tax climate, it also means senators will need to be even more ambitious in removing sales tax exemptions if they want to fund a major reduction in property taxes.
For example, while Nebraska collects tax on only 34% of what is sold in the state, neighboring South Dakota collects sales tax 62% of the time.
It may seem counterintuitive, but if senators eliminated as many sales tax exemptions as possible, they could raise enough new revenue to reduce the state sales tax along with local property taxes.
Nobody would be thrilled to pay sales taxes on previously exempt goods and services, but a lower sales tax rate overall, in addition to lower property taxes, might make the change more tolerable.
Policy aside, any proposal will need significant support from legislators in the Omaha metro area. More than one-third of our state senators represent districts including Douglas and Sarpy Counties. If the Legislature fails on property taxes in 2020, it will likely be due to a perceived lack of consensus or urgency in this community.
That’s why the Platte Institute is hosting a property tax reform town hall, open to the public, featuring five Omaha-area senators. They will join me Tuesday at the Omaha Firefighters Union Hall at 60th and Grover Streets.
More information is available at omahatownhall.eventbrite.com.
State senators need to hear from their constituents before they return to the State Capitol in January. If Nebraskans want property tax reform to be the top priority in 2020, they must show up, speak out and band together.