“Those that respect the law and love sausage should watch neither being made,” according to American author and humorist Mark Twain. Some quibble and say the quote should be credited to Otto von Bismarck, the Prussian statesman and architect of German unification.
Whoever said it is not important now. It’s an apt description of what is about to transpire, as lawmakers get serious about addressing the nagging issue of property tax relief. No quibbling. Expect a full-blown battle pitting agricultural interests against business. Throw in the schools and local governments that depend on the tax and mix with the people who just want their streets plowed in the winter. Dangle suggestions of an urban -- rural split.
Absolutely nothing volatile about that mix is there? Now filter it through lobbyists and special interest groups and 49 state senators who have a couple months ahead of them to consider the 141 bills introduced this session that mention the words “property tax.” That’s sausage!
There will be some interesting closed-door sessions in the Legislature’s Revenue Committee as lawmakers sort through what should come down to a handful of viable proposals for full legislative debate. Committee Chair Sen. Lou Ann Linehan of Elkhorn said she hopes the full legislative debate can begin by April. She expects the committee will present a package, but it may not be the Whopper some expect. Would you believe a Whopper Jr.? Did somebody say cheeseburger?
Consider: Increased taxes on liquor, tobacco, some goods and services; a four-year freeze on property taxes; a tax on millionaires; a rewrite of the state aid to education formula. That’s a lot, but one thing is certain. Lawmakers will have ample time to get something done, unlike last year when the proposals came out of committee too late to allow action.
There are a few major components. One is Governor Pete Ricketts’ proposal to increase the state property tax credits by $51 million (that’s about $106 discount on a $100,000 home). It would also require that at least $275 million a year in such credits are provided and propose a constitutional amendment for voter approval to limit property tax revenue increases by local taxing entities to three percent a year. His plan would also base agricultural property values on income-producing potential, not recent sales.
Senator Tom Briese’s LB314 would eliminate sales tax exemptions on things like candy, soda pop, bottled water, home remodeling, haircuts and auto repairs. State sales taxes would rise by a half-cent and taxes on a pack of cigarettes would go up $1.50. Taxes on beer and alcohol would about triple. Itemized state income tax deductions would go away, except for medical expenses. The bill would generate an estimated $782 million in new revenue, of which $510 million would be used for increased property tax credits and would increase aid to schools by about $236 million. Briese says new revenue to offset property taxes is important.
Senator Mike Groene’s LB695 would replace the current state school aid formula to deliver more money to more schools. Right now, 175 of the state’s 244 school districts get no so-called equalization aid. The proposal would provide about $3,500 in foundation aid for every student in the state. Adjustments that generally benefit larger schools would be eliminated and school budget increases could not exceed the consumer price index. The current property tax credit program and elimination of some sales tax exemptions would help fund the change. He said shifting taxes is the only way to get property tax relief.
Senator Erv Friesen’s LB497 would increase aid to schools, with every school district eventually receiving at least 50 percent of its basic funding from state aid. It would lower the valuation of ag land for purposes of school taxation in steps from the current 75 percent to eventually 40 percent. The proposal would also limit spending increases by school districts. His bill includes $523 million in new revenue, by doing away with sales tax exemptions like groceries, house cleaning and vehicle repairs. There are also steep increases in taxes on tobacco, beer, wine and liquor. Friesen also wants $150 million for the state’s beleaguered cash reserve fund.
I like Briese’s challenge to be part of the solution or get out of the way. It’s time for hard decisions and solid action. Nebraskans have waited far too long for property tax relief.