How Do We Lower Taxes?


How Do We Lower Taxes?

The 2017 Legislative session has ended. The Legislature worked on major property tax and income tax reform, but failed to reach a consensus. More work is to be done on the property tax dilemma, and Senator Erdman has vowed to allow the people to vote on property tax relief if a compromise is not reached soon.

How should we fix the property tax problem in Nebraska? Perhaps it’s time for an automatic “trigger” every time values increase. Here is one idea being discussed. Imagine that every year when property values increase, the state automatically lowers the levy rates of cities, schools and counties to equal the prior year funding. This would actually lower taxes every time there is a value increase. Plus, local elected officials would have the opportunity to raise their levy if they can demonstrate the need for the extra money. Right now, local elected officials automatically get the growth money – and they get to claim that they have not raised your taxes.

This idea seems like a simple fix to future problems and it would create the opportunity for a “public hearing” every year if an elected body wants to raise your taxes. In Lincoln for example, Lincoln Public Schools (LPS) intends to take the entire $18 million property tax windfall this year. The elected school board can claim that they didn’t raise your taxes, but most of us will be paying more than we did last year.

I am not claiming that this is a good idea. Nor am I claiming that it’s been thoroughly vetted. One downfall is that if a new $30 million dollar building goes up on the corner of 27th & O Street, the city, county and schools would normally see more money from taxes due to the increased value of the development. This plan would not allow for that to happen unless there is a vote by the elected officials. While it’s a negative to the elected officials, it’s a boon to homeowners because it would force the levy rate down and they would see property tax relief.

This solution does not fix the immediate issue that our state farmers are seeing. With commodity prices going down and their property taxes at an all-time high, I am not sure this provides the immediate relief that they are seeking. However, pouring state tax dollars into a solution does not seem to be working for them either. You see, state Senators can fund the property tax relief fund, but they do NOT control local property taxes. So even if Senators throw another $100 million at the problem, it does not guarantee that local officials won’t raise their local tax asking.

Senator Erdman is looking for a solution that makes everyone happy, including the teachers union. I am not sure that such a solution exists, but he is to be commended for trying. Property taxes are high in Nebraska and we need to find an answer to the problem soon.