Revenue Committee Hears Ag-Focused Property Tax Bills

LINCOLN - With the nation’s seventh-highest property tax rates, many Nebraskans are looking for any sort of relief. And according to Sen. Mike Groene of North Platte, farmers are feeling the burden more than others.

On Feb. 21, Groene presented LB 530 in front of the unicameral’s Revenue Committee, explaining that the bill would drop the valuation at which agricultural property is taxed from 75 percent to 65 percent.

The last time the tax valuation on Nebraska agricultural land decreased was in 2006, when LB 968 dropped it from 80 percent to 75 percent of the actual land value. Groene said because agricultural land’s property value in Nebraska has increased substantially since 2006 due to high demand, now is the time for another adjustment.

And as property values have increased and farmers have had to pay more in property taxes, Groene said rural Nebraska’s economy has taken a hit.

“The very area where the land values went up, property taxes skyrocketed, and we have a recession, a depression, depopulation, home valuations decreasing, main streets boarded up,” he said. “So high taxation doesn’t seem to be the answer for economic development in the long run when you look at facts.”

The bill drew support from Steve Ebke, who testified on behalf of the Nebraska Corn Growers Association and other agricultural organizations and said LB 530 would be a step in the right direction in solving the problem of high property valuations for agricultural land.

But others, like Jon Cannon of the Nebraska Association of County Officials, said Groene’s bill would disparately affect schools and local governments because of tax base erosion. He used Cuming County as an example of a rural county with a low tax levy, which would have to rise in order to accommodate the shortfall from lowering property taxes on ag land.

“There’s not a huge city population to shift those taxes to, so the people up there are not going to see much of a difference in their taxes,” he said.

The committee took no immediate action on the bill. LB 530, however, is potentially part of a larger property tax legislative package which the Revenue Committee plans to bring to the unicameral floor by April.

Sen. Kate Bolz of Lincoln also brought her own property tax bill, LB 420, to the Revenue Committee Feb. 21.

If LB 420 were to pass, it would allow citizens who have limited income available to pay property taxes to apply for a “circuit breaker refundable income tax credit.”

Bolz described the circuit breaker, saying when a person’s property tax burden hits a certain level relative to their income, a circuit “breaks,” giving the person an income tax credit.

“This strategy offers targeted and meaningful relief that creates stability for homeowners and renters in all communities of all sizes across the state,” she said.

According to the bill, owners of agricultural and horticultural land whose annual gross income is less than $350,000 per year would be eligible for the tax breaks. Additionally, homeowners or renters would qualify if they are married and filing jointly with annual gross income less than $100,000 or are filing individually and make less than $50,000 annually.

The bill would allocate $107.6 million to fund credits for agricultural taxpayers each year and $82.7 million for residential taxpayers. If the caps are exceeded, the credits would be adjusted accordingly.

Tiffany Friesen Milone, the policy director at OpenSky Policy Institute, was one of four proponents of LB 420 who recognized the disconnect between many citizens’ property tax rates and their income. Some people who buy a house which increases in value later on may not be able to keep up with the tax payments, and Friesen Milone said the circuit breaker system would work well as a way to help people in such a situation.

“As the state looks at ways to address the financial burden of property taxes on those least able to afford them, LB 420 provides targeted property tax reductions to those who need it most,” Friesen Milone said.

There were no opponents to the bill, and the Revenue Committee did not take immediate action on the bill. More property tax-related bills will be heard by the committee in the week of Feb. 25 from Groene, Sen. Brett Lindstrom of Omaha and Sen. Tom Briese of Albion, among others.