The Legislature will soon be debating an amended version of Legislative Bill 408, a bill that would limit property tax askings to 3% per year, with various exceptions to protect our local units of government.
Although inflation has been averaging about 1.75% per year during the last 10 years, and wage growth has been less than 2% annually, property taxes have been increasing at about 4.45%. That is forcing an unreasonable, unsustainable burden on our taxpayers. LB 408 addresses this concern in a reasonable manner that should be very manageable for our political subdivisions.
Initially, some stakeholders expressed concern over the concept of a 3% cap. The latest amendment addresses any reasonable objection.
LB 408 would not apply to actual growth of the tax base. Note that actual growth averages nearly 1% per year. So in reality, on average, this limit is closer to 4%.
It contains a mechanism that will allow a school district to exceed its cap by an amount equal to the reduction in state aid caused by an increase in valuation of its tax base.
LB 408 does not apply to revenue necessary to address fire and flood prevention, and accessibility, health and safety code violations. Nor does it apply to funds necessary to address the impact of a natural disaster, or to address that portion of wage increases mandated by an order of the Council on Industrial Relations.
The limit of LB 408 does not apply to funds necessary to repay bonds of any type. And it allows a local governing board to exceed its limit if it so chooses, as long as average growth in the ensuing three year period averages no more than 3%.
Furthermore, it will sunset after six years.
And in the spirit of local control, LB 408 allows the local voters to override the limits.
Anger and frustration are common among Nebraskans burdened with the third-highest agricultural and fourth-highest residential property taxes in the country. This angst may someday manifest itself in the form of a voter-initiated ballot proposal that could put our state in an untenable situation. Anything we can do to achieve progress on the property tax issue will mitigate this risk.
LB 408 provides an opportunity to show Nebraska taxpayers that we care about their concerns over property taxes. And it does so in a way that will not impair the ability of local government to provide the services Nebraskans expect.
But the story does not end there, nor should our efforts. We must continue to work toward adequate and fair state support of our local governments. Education funding reform, and even reform of local government funding, must remain a priority. And the reasonable limits of LB 408 are an important part of the process, and should be enacted.
Tom Briese, an Albion resident, is a state senator representing District 41 in the Nebraska Legislature. He is a member of the Revenue Committee.