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Gov. Pillen and state lawmakers are taking another run at reducing the much despised, high property taxes in our state, this time via a commission on reforming the way we fund K-12 schools.
You gotta admire the governor for keeping on trying. It was one of his top campaign pledges – to cut property taxes.
But, we seem to have gotten deeper cuts in state income taxes in recent years than real property tax relief.
I know, I’m veering off track. Back to property taxes.
“Reforming” the way we fund local schools – which means increasing state funding for local schools – is a key way to reduce local property taxes.
But getting there has proven harder and more complicated than beating Iowa in a college football game. I can’t get over last year’s loss when we fumbled away a certain victory at the end against a Hawkeye team that had no discernible offense.
OK, I’m veering off track again. Despite lots of efforts, and some progress here and there, Nebraska’s property taxes are still among the highest in the nation.
“Lots of land and not enough people” has always been one of the excuses. (If not for immigrants, our state’s population would be stagnant.)
But the economy has also been to blame. After the recession years around 2009, farmland prices exploded, while the price of residential property barely increased. It dramatically increased farmland valuations, and resulted in a great load of property taxes being paid by farmers and ranchers.
To be sure, state lawmakers have tried to deal with that, and have even directed a larger share of state property tax credits to agricultural land. And overall, we’re getting more credits from the state to offset local property taxes on homes and ag land.
But despite all that, Nebraska’s property taxes continue to rise. Our “effective rate” is the 4th highest in the U.S., according to the Tax Foundation. Our taxes on property are the 6th highest according to Rocket Mortgage, and 9th highest according to Wallet Hub. Not the kind of Top 10s we want to be in.
Pillen has tried every year to do something about high property taxes. He increased state aid to schools, proposed (without much luck) a slew of tax shifts by eliminating sales tax exemptions on services and luxury items, and even called senators into a special session last year on taxes.
But like those pesky Iowans, there always seemed to be an effective defense to stop any meaningful progress. To be sure, it’s much easier to say “I’m going to cut property taxes,” than to actually get it done.
The same thing happened during this year’s session of the State Legislature, forcing Pillen and State Sen. Jana Hughes of Seward to opt for the timeworn solution to perplexing problems – appoint a committee to study it.
This approach – appointing an 18-member School Finance Reform Commission to suggest a better way to support K-12 education by Dec. 1 – can work. But it will face the same head winds past efforts have confronted – it’s a complicated problem, there’s a lot of different ideas on what will work, and every solution has winners and losers (and each hires lobbyists). Thus it’s hard to find consensus.
Personally, I think the state should shift more of the tax load onto sales and income taxes. Every year, it seemed, the Legislature granted a new sales tax exemption for some entity that was threatening to move out of the state. Time to get rid of some of those. And I’m all for taxing junk food and some services. Those are not new ideas, but past efforts have lacked a solid consensus, between ag and business interests, between rural and urban state senators, to get it done.
It’s often said that it takes a “crisis” to get meaningful change enacted.
I’m not sure we’ve reached a crisis level. Maybe, if crop prices and farm income continue to drop, we might get there.
But we all want lower property taxes. Maybe, just maybe, this new, 18-member commission might achieve a breakthrough.
Paul Hammel has covered state government for decades. Prior to his retirement, he was senior contributor with the Nebraska Examiner.
