Bill Reduces Ag Land Property Taxes
May 5, 2021 | View PDF
LINCOLN — Property tax continues to be a heated topic in the Nebraska Legislature. Senators took nearly the entire day on April 21 to debate and vote on LB2, a bill that would reduce the amount of taxes agriculture landowners pay to school district bonds.
Currently, ag landowners pay property tax for 75 percent of their land to area school districts. Nebraska school districts levy local property tax to pay off bonds they’ve acquired for various district needs.
If the bill passes, the property tax rate ag landowners pay would decline to 50 percent, for the purpose of school district bond payment. Since school districts receive some funding through property taxes, this also means less taxpayer money would go to Nebraskan schools.
Senators unanimously passed a Revenue Committee amendment 37-0 that changed the original bill language of farmland tax valuation from 30 percent to 50 percent for the purpose of paying school bonds.
Sen. Tom Briese of Albion said in rural areas, agricultural landowners make up most of the tax base but can be outnumbered by homeowners when voting on acquiring bonds for schools. By reducing the property tax on farmland in his bill, Briese said excessive spending can be avoided.
“In many districts, ag land comprises the bulk of the tax base, but yet only a small fraction of the voters have ag interests,” Briese said. “You can say this is ag friendly, but it’s also sound tax policy. More importantly, it’s sound tax policy giving everyone a little more skin in the game at the voting booth.”
Currently, farmers and ranchers with agricultural land pay a larger percentage of local school district bond debt. Briese said the bill is fairer to farmland owners.
Sen. Mike Groene of North Platte also said decreasing farmland valuation to 50 percent when paying school bonds would be a victory for rural Nebraska.
Under Briese’s bill, the statutory minimum of the state’s property tax credit fund would increase from $275 million to $313 million per year beginning in 2022.
During debate, Groene introduced an amendment to exclude any changes to the property tax credit fund because it was “unnecessary.” His amendment passed 37-1.
Some senators were concerned about how the bill would affect rural Nebraskans who are not ag landowners. Sen. Machaela Cavanaugh of Omaha spoke in opposition to the bill and called it a tax shift rather than a tax cut. Since agricultural land makes up the bulk of the tax base and school funding in rural Nebraska, Cavanaugh said rural homeowners could have to make up the difference.
“There are towns that help support the work around farming, and the people that live in those towns are who are being impacted by this,” Cavanaugh said. “In a way, this is a tax to benefit the wealthy and hurt the poor in those communities.”
Sen. Tom Brandt of Plymouth pointed out that many of the senators who are opposed to this bill represent more urban areas in the state.
“This bill does not affect you,” he said. “Please note when we take our votes who does not vote to support this bill. These are the senators who oppose rural kids getting meaningful state aid.”
Ultimately, three senators voted against the bill, including Sen. Megan Hunt of Omaha. Hunt said she is concerned that the bill diverts more money from schools and social services.
“We cannot keep cutting taxes at the expense of social services,” she said. “It frustrates me to hear us talking about all of these great plans we have for economic growth when we’re not doing the things that make families want to put down roots and stay here.”
The bill advanced to the next round of debate on a vote of 38-3.