Farmers who have seen their property taxes surge rallied Wednesday behind Gov. Pete Ricketts’ property tax plan, but local governments voiced opposition to parts of the plan that would hamper their ability to collect extra tax revenue.
Ricketts acknowledged that his plan alone won’t fix all of the financial pressures on the state’s farmers and ranchers, but touted it as a starting point.
One part of the Republican governor’s package would prevent local government property tax collections from growing by more than 3 percent per year, unless voters approve a larger increase in a special election. Lawmakers wouldn’t pass the measure themselves but would place it on the ballot for voters to consider in the 2020 general election.
“If you don’t have that fiscal restraint, you’re not going to have that long-term tax relief,” he said in testimony to the Legislature’s Revenue Committee.
Sen. Lou Ann Linehan, the committee chairwoman, said she sponsored the measure for the governor as a way to force local governments to keep their spending increases below recent levels of inflation.
“I think we’re trying to focus people on the real issue, which is spending,” she said.
Another piece of the package would add $51 million a year to a Nebraska tax credit designed to reduce property tax bills, bringing the total to $275 million a year. Ricketts’ proposal would also lock in that amount to make it harder for future lawmakers to raid the fund.
“This is a straightforward approach to tax relief without a tax shift,” said Sen. Brett Lindstrom, of Omaha, who introduced the bill on the governor’s behalf.
Some farmers say their property tax bills have surged over the last decade, hampering their ability to stay in business. One family told lawmakers they moved their operation to Missouri because property taxes were lower there.
Frederic Oltjenbruns said he spent 50 years farming on family-owned land just north of Lincoln, but moved to Missouri after getting a $50,000 property tax bill in 2017.
“Lancaster County made more money off of my farm than I did,” he said. “… Moving out of your home state, that’s pretty radical stuff, and we didn’t take it lightly.”
Oltjenbruns said his property tax bill on his Missouri farmland was slightly more than $1,100.
Shane Greckel, a Bloomfield farmer and former legislative candidate, said his annual property tax bill has jumped from $800 in 2006 to $3,400 in 2017 on the same farmland.
“That’s (an extra) $2,600 I had to come up with just to keep the ground,” he said. “At this point it’s not just keeping the ground. It’s renting it from the government.”
Local school boards and cities objected to the proposed 3 percent cap on revenue growth.
LaVista Mayor Douglas Kindig said his city and others in fast-growing Sarpy County need the flexibility to serve their residents. Kindig said local governments sometimes use the extra revenue to build up their cash reserves or pay for large economic development projects.
The proposal could prompt local governments to raise sales taxes and fees to compensate for revenue they need to provide services, according to a brief from the OpenSky Policy Institute, a Nebraska tax policy think tank that frequently calls for more funding of K-12 public schools.
Some rural lawmakers said the larger issue is the state funding formula for Nebraska’s K-12 public schools, the biggest consumer of local property taxes. Sen. Mike Groene, of North Platte, said lawmakers need to go beyond what they’ve done in recent years to make a reduction property owners will notice.
“We just don’t want everyone to have a wine and cheese party, say ‘We provided property tax relief,’ and go home,” he said.