No change: Nebraska legislature will not come to terms on property tax relief this year
May 12, 2017
Landowners in Nebraska won't be seeing the property tax relief promised by LB 461 this year, but some say it wouldn't have been much relief anyway.
The bill, which was actually three bills addressing the property valuation system, income tax and property tax reform, was just too big, said Senator Steve Erdman, representing the 47th district, mostly rural areas in the panhandle.
In Erdman's weekly column, he wrote, "LB 461 is an omnibus bill created by the Revenue Committee, which consolidated income tax relief bills with agricultural land valuation bills, rolling them into one new bill. The bill poked at the clash between those living in our state's population centers, who want income tax relief and residential property tax relief, and farmers in our rural districts who need property tax relief and agricultural land valuation reform. Twenty-four amendments were proposed for the bill, virtually killing it before it ever got out of the gate. Debate on the bill lasted for three hours, resulting in a stand-off and ending in a filibuster."
"I never spoke to anyone on the campaign trail that wanted income tax relief. They wanted property tax relief," Erdman said.
“For those of us from west of Lincoln it’s so discouraging that you can’t get (the senators from Omaha and Lincoln) to understand how much the property tax situation is impacting the livelihood of the people in the state.” Tom Brewer, freshman District 43 senator
The inclusion of the income tax reform with the property tax and valuation bills was an attempt to create a bill that both urban and rural senators would see some value in. Instead, it created a bill too cumbersome to pass, Erdman said.
The final vote to end the filibuster and continue discussion on LB 461 was 27 yes, 9 no and 13 present-not voting. The law requires 33 votes to end a filibuster. That vote brings up another issue, said Erdman. The option to be present but not vote allows the senators to defeat bills without having a "no" vote on their record for that issue.
Nebraska Farm Bureau opposed the bill because it was angled the wrong direction to provide any meaningful relief to ag producers.
"Property taxes already account for 48 percent of the combined collections of property, state sales, and state income taxes. Dedicating $400 million of income tax cuts would only push the tax burden further out of balance," they said in a press release.
"We also had concerns that if the bill passed as is, LB 461 would ultimately put greater pressure on property taxes. In times of a state budget shortfall, the sheer volume of the income tax cuts proposed would put pressure on the legislature to push more state funded responsibilities like education onto local property taxes as a way to balance the state budget," said Ansley Mick, Nebraska Farm Bureau state director of government relations
Tom Brewer, freshman senator from District 43—also in western Nebraska—said he's frustrated with how the process went. "A lot of the larger farm organizations took a dislike to (LB 461) without giving us a chance to fix it on the floor. What we got was nothing."
The differing priorities between urban and rural senators is never more clear than in discussions about taxes.
"For those of us from west of Lincoln it's so discouraging that you can't get (the senators from Omaha and Lincoln) to understand how much the property tax situation is impacting the livelihood of the people in the state," Brewer said.
There are five senators west of North Platte (in central Nebraska) and 29 in Lincoln and Omaha.
The divide between urban and rural senators is more pronounced in Nebraska's single house than in other states in similar situations with two houses. However, Nebraska's constitution allows only for representation based on population, said Erdman, so even if a bicameral legislature were enacted, it wouldn't fix the problem.
"It is what we've got. That's why it's very important when we elect people from the rural sector that we elect people who are engaged and outspoken and share our needs and concerns," he said.
Brewer agreed that the lack of support is often caused by a lack of understanding. "It requires working knowledge of ag issues that's so foreign to (urban senators) and they don't have a burning desire to know it. They oppose things because they don't understand it."
On Brewer's Facebook page he shared some of the testimonies to the Tax Equalization and Review Commission in Lincoln the day after the bill was defeated. "In 1989, I had to sell 23 calves off of my ranch to pay the property taxes. Now I have to sell 76 calves to pay the tax bill," said one Cherry County rancher. It's a common story across Nebraska. Some ranchers have sold out and moved to places where the taxes are more affordable, while others are staying and fighting.
"Ag is the number one economic driver in the state and they should take care of those guys. I think there's a breaking point. They'll continue to raise property taxes until your taxes exceed your ability to make a living. As we knock off the farmers and ranchers, our ag community will be broken not because of their ability to raise crops or cattle, but because of the way the government is taxing them."
The issue is finally starting to hit home for the urban senators, said Erdman, because residential property tax rates have started rocketing up, as the ag land rates have been doing for nearly 20 years.
Erdman and Brewer said they're both committed to providing property tax relief for their constituents. Both say it's their highest priority, and they are already working on legislation for next year's session. Erdman is hoping to be able to shift some of the tax burden onto sales tax, including beginning to collect sales tax for internet sales. That may be unconstitutional, unless it is collected voluntarily, so he is hoping to hear a final answer on that before he moves ahead. He said Amazon.com has already agreed to voluntarily collect sales tax, and estimates that alone could bring in an additional $50 million in revenue.
Erdman said there's really no more chance for property tax reform in this session. They still have to pass the budget and the Speaker recently announced they'll go home four days early.
"If I were going to grade the performance of this legislative session it would be below passing," he said. "We did not balance the budget correctly, we didn't give anyone property tax relief and we're spending more money than last year when we're already in a deficit."