Taxes and Budgeting
Above the doors of the Nebraska State Capitol is a quote, “The salvation of the state is watchfulness in the citizen.” I am reminded of this quote time and again, not only when I enter the Nebraska State Capitol, but also when it comes to the time of year for political subdivisions to plan their budgets. When I mention political subdivisions, I am referring to those entities which make use of our local sales and property tax dollars we pay, such as our city, county, school district, natural resource district, and others.
Over the course of the next few months, we will hear political subdivisions refer to the property tax levy. I am always cautious because of increases in property valuation, which is the basis for property tax assessments. Recently I have heard elected officials refer to the change in property valuations in Lancaster County increasing by between ten and eleven percent. When the value of residential or commercial property increases, our property tax increases even when the tax levy remains the same.
As these political subdivisions release their proposed budgets and go through the budgeting process, we as citizens must remain watchful! Leaving the property tax levy the same does not mean the property taxes paid on residential and commercial property will remain the same. We have heard the taxing entities say they did not raise our taxes, just because they did not raise the levy. However, valuations and levy rates are like a hand in a glove: they go together. If valuations increase by ten-percent, but the levy is not lowered by ten-percent, you are paying more in taxes. Remember, while the valuations increase and the levy remains at the same level, property taxes paid by residents and business owners will increase.
Over the past few years there has been much publicity surrounding the Legislature adding money to the property tax credit relief fund. Check your property tax statement and look at the amount of increase in the property taxes being paid. The property tax credit relief fund essentially is decreasing the total amount of the increase in taxes because of valuations. When political subdivisions release their budgets, we will inevitably see budget increases of varying amounts.
The watchfulness of the citizen will be important to make sure we are contacting our elected officials to encourage them to hold the line on the budgets this year. Over the past year, many businesses in our community have encountered unprecedented circumstances beyond their control which have adversely hurt their business and employees. Now residential and commercial property owners will be facing a double digit increase in valuation (based on the estimated average) while trying to recover from a difficult year financially. LIBA will scrutinize the budgets of these taxing entities on your behalf and let you know which budgets our analysis shows are out of line. Elected officials will then need to hear YOUR voice to let them know they need to take a sharper pencil to their budget to lower the windfall of taxes you will have to pay.
The citizens of Lincoln and Lancaster County must provide extra “watchfulness” and be ready to provide their comments on the changes in property taxes during this difficult time. Make sure to check the schedule for each of our political subdivisions and find the times when public comment opportunities are available. Follow LIBA for more updates and prepare to be watchful.