Why is property tax reform necessary?
Nebraskan homeowners are burdened with the seventh highest property taxes in the nation and due to current policy, our farmers and ranchers pay the third highest property taxes in the nation. Property owners paid six percent more in property taxes in the 2014-15 fiscal year (FY) as compared to the previous year. Additionally, property taxes have increased 176 percent on agricultural land, 29 percent on commercial property, and 35 percent on residential properties over the last ten years. Such increases far outpace the rate of inflation and wages, which makes this an unsustainable way to collect needed revenue for Nebraska priorities.
Why should we not be more focused on income tax reform?
To ensure adequate funding for Nebraska’s priorities, our tax structure needs to be balanced. A fair and balanced tax system entails income, sales, and property taxes comprising around a third of the total revenue generated. Currently property taxes account for roughly 48 percent of total state revenue, which far exceeds the national average.
What does property tax reform mean for Nebraska schools?
Property tax reform should create a more balanced tax system, be revenue neutral, and provide a stable funding source for Nebraska’s schools. Reform should maintain and strengthen current funding for education.
Don’t most states rely on property taxes to fund schools? Why should Nebraska be any different?
Nebraska is no different than other states, in which the state depends on property taxes to help fund schools. However, Nebraska depends on property taxes for a much greater portion of school funding as compared to other states. Over 60 percent of Nebraskan’s property tax bills go to funding K-12 education. Nebraska is second in the nation in the percentage of K-12 funding derived from property taxes, providing 48 percent of overall funding from property taxes to K-12 education as compared to 29.5 percent averaged nationally. Such a heavy reliance on property taxes for critical funding is not a sustainable model.
Isn’t property tax reform just a bailout to Nebraska’s agricultural industry?
Agriculture is Nebraska’s number one industry and generates nearly a quarter of all employment in the state, yet farm and ranch properties pay the third highest Ag land property taxes in the country. Under current tax policy in Nebraska, we are one bad planting season and/or one bad commodity price dip from a major economically generated revenue crisis. And when you consider that Nebraska schools depend on property taxes for 60 percent of their funding, our education system will be hurt the most by the current unstable tax system.