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OMAHA, Neb. (AP) - Nebraska Gov. Pete Ricketts pitched his property tax proposal to a legislative committee on January 24th, warning that voters might take the issue into their own hands if lawmakers don’t cap how much local governments can collect.
The Republican governor’s measure won support from a prominent farming organization and conservative groups, but faced opposition from cities, counties and school advocates who say it would undermine local control.
The proposed ballot measure would limit the growth of local property tax collections to 3% per year. Voter-approved bond measures would be excluded.
Property taxes in Nebraska have increased by nearly 52% over the last decade, outpacing the state income growth of 48% and 18% inflation, according to the state Department of Revenue. The issue has repeatedly surfaced in the Legislature, with many farmers and homeowners lobbying lawmakers, although opponents argue that the higher rates are driven by inadequate state funding.
“This is what makes people mad,” Ricketts said in testimony before the Legislature’s Revenue Committee. “There are opponents here and they’re going to say it’s draconian or austerity. It’s not draconian or austerity to live within your means.”
Ricketts pointed to the 1966 constitutional amendment approved by Nebraska voters that stripped the state of its power to levy property taxes. Property taxes are now imposed only by local government, while the state relies primarily on income and sales taxes.
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In recent years, activists who have failed to pass major bills in the Legislature have turned to ballot campaigns to appeal directly to voters. The strategy has been used successfully by supporters of casino gambling and the death penalty, and a proposal to legalize medical marijuana would have had a good chance of passing if a court ruling hadn’t derailed it.
Nebraska Farm Bureau President Mark McHargue said many of his members appreciate the steps lawmakers have taken in recent years to try to lower property taxes but want to see more done to reduce what is often one of their largest and fastest-growing expenses.
The proposal “says ‘enough is enough,”’ McHargue said. “At some point, we’ve got to figure out how to cap this thing.”
Sen. Lou Ann Linehan, the Revenue Committee’s chairwoman, said the status quo is unacceptable because it’s becoming less affordable for homeowners on fixed incomes and farmers who are a major part of Nebraska’s economy.
“Ever since I moved back to Nebraska in 2012, I feel like I’ve been watching a train wreck,” said Linehan, of Omaha.
One lawmaker floated the idea that farmers who would benefit most from the measure should surrender some of their state sales tax exemptions to balance out lost revenue, which the state could then return to local governments. Nebraska’s tax code has hundreds of sales exemptions, but lawmakers have struggled to get rid of any in favor of a simpler tax system.
“I think there needs to be some give and take,” said Sen. Rich Pahls, of Omaha.
Local government officials said the measure would take away the flexibility they have to manage their budgets and make it harder to pay for larger, one-time expenses, such as a new Lancaster County Jail in Lincoln. Dennis Meyer, the county’s budget fiscal officer, said the county still has a lot of roads and bridges that need repairs and rising employee health care costs that are difficult to contain.
“It really kind of pushes us into a box,” he said.
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Lynn Rex, executive director of the League of Nebraska Municipalities, said putting the measure in the state constitution through a ballot measure would make it difficult to tweak if changes are needed later. Rex, who represents Nebraska city governments, said it could also raise borrowing costs for local governments, which might ultimately cost taxpayers more.