Nebraska farm, business groups spar over property tax bill

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LINCOLN, Neb. -- A bill that would lower Nebraska’s property taxes by shifting more state aid to schools won support Wednesday from the state’s top agricultural and business groups but faced strong opposition from schools that don’t want restrictions on their taxing power and don’t trust the state to maintain its funding.

The face-off before the Legislature’s Revenue Committee was a troubling sign for the bill’s prospects, although the committee chairwoman said the proposal was likely to change. Opposition from the state’s mid-sized and largest schools is a major hurdle that supporters would likely have to overcome in the one-house Legislature.

“It’s a work in progress,” said Sen. Lou Ann Linehan, of Omaha, the committee chairwoman.

Committee members pitched the bill as a way to lower property taxes for farmers, ranchers, home owners and business owners without raising other taxes. A bill last year that would have increased sales taxes to lower property taxes died following objections from Gov. Pete Ricketts.

The bill would reduce the percentage of agricultural, residential and commercial property that school districts can tax while triggering a boost in state aid. The state would pay an additional $106.3 million in the first year after the bill becomes law, and the amount would increase over time.

Although some schools would see a funding boost, officials from fast-growing Lincoln and Omaha-area schools said they would effectively lose state assistance at a time when they’re accepting more special education and high-needs students.

The bill would get rid of a part of Nebraska’s school-funding formula that allows big schools with lower per-student costs to collect more money. It would also restrict the amount of money that school boards can generate locally when they receive less state aid than expected.

“I cannot support a bill that takes away the control of locally elected officials,” said Dave Welsch, president of Milford Public Schools’ board of education.

Lawmakers who support the measure argue that some schools are taking more money than they need and driving up property taxes.

School officials also objected to provisions that would tighten restrictions on how much they can increase their spending each year, noting that teacher salaries are their largest expense by far and are driven by labor contracts.

“Freezing growth within a district is simply not feasible without adversely affecting staffing,” said Jason Buckingham, business manager for Ralston Public Schools.

Supporters said lawmakers need to act this year to help farmers who have seen sharp bumps in their property tax bills as well as homeowners who are now starting to see similar increases. The Nebraska Chamber of Commerce & Industry endorsed the legislation, as did the Nebraska Farm Bureau and other business and agricultural groups.

“It’s time to move the ball down the field,” said Bud Synhorst, president and CEO of the Lincoln Independent Business Association.

Nebraska Farm Bureau President Steve Nelson noted that many of the state’s smallest, rural schools don’t receive any state equalization aid, forcing them to cover their costs with local property taxes.

“If we really care about attracting and keeping families in rural Nebraska, we must take this step to noticeably reduce Nebraska’s overreliance on property taxes,” he said.