By GRANT SCHULTE, Associated Press
LINCOLN, Neb. (AP) — A coalition of Nebraska lawmakers is working on a new effort to lower property taxes, despite major hurdles, an uncertain state budget and repeated failed attempts to satisfy farmers who often pay the most.
The group of rural and urban senators wants to change Nebraska’s school-funding formula, which has been sending less money to rural schools as farm and ranchland values soar. The loss of state equalization aid has forced many school districts to cover their costs by raising property taxes.
Nebraska lawmakers spun their wheels on the issue this year, largely because of an urban-rural split and concerns that using state money to reduce property taxes would hurt school funding and other government services. Senators also had to weigh competing property tax plans, some of which would have raised other taxes.
“The goal is to have a single bill that everybody can get behind,” said Sen. Mike Groene, of North Platte, who organized the coalition. “The effort is there. It just hasn’t been successful because we’re all fighting each other.”
Lawmakers have tried for decades to lower property taxes, which are levied by local governments, with mixed results. Public school expenses account for roughly 60 percent of all local property taxes paid.
Groene said he expects the group’s 10 members to keep an open mind as they consider options. The group is scheduled to meet July 13 at the Capitol, and Groene said he hopes to have a proposal ready by mid-December, in time for the 2019 session.
The school funding formula, known as TEEOSA, distributes money to K-12 public schools based on a formula that looks at each school’s expected needs and the revenue it’s able to generate locally through property taxes.
More than two-thirds of Nebraska’s 244 school districts no longer receive any state equalization aid, primarily because their boundaries encompass too much valuable farmland, according to the state Department of Education. Farmers argue they’re shouldering too much of the burden at a time when farm incomes have declined because of low commodity prices.
Urban schools, which receive most of the state aid, note that their district enrollments are growing and they don’t have nearly as much valuable land to tax. Of the $848 million in equalization aid that will get distributed to schools this coming academic year, nearly half will go to Omaha and Lincoln public schools, according to the Department of Education.
Some lawmakers in the working group said they’re open to compromise, but skeptical that they’ll be able to substantially lower property taxes without finding new revenue somewhere else.
“As long as we’re not bringing any new revenue to the table, it’s going to be hard to deal with it,” said Sen. Curt Friesen, a farmer from Henderson. “I don’t think there are the votes to take (existing school aid) and distribute it to different schools. It’s just not going to happen.”
Making substantial progress could prove challenging even if the state budget recovers next year, said Speaker of the Legislature Jim Scheer.
Lawmakers have cut many state agency budgets the last two years to adjust for shortfalls in tax revenue, and if tax collections improve next year, some may seek an increase in funding, said Scheer, of Norfolk. If the budget remains tight, Scheer said he’ll continue to enforce a rule that requires lawmakers to show how they’ll pay for legislation before he’ll place it on the legislative agenda.
Even then, Scheer said, any proposal that tweaks the school funding formula will probably need support from a filibuster-proof majority of 33 senators.
“You’ve got to bring a lot of people on board,” he said.
The property tax push comes as a conservative taxpayer advocacy group prepares to launch a new property tax petition effort in the wake of a drive that stalled in April.
Nebraska Taxpayers for Freedom plans to formally announce the petition drive Tuesday at its annual Independence Day tax rally. Because the signature-gathering deadline for ballot petitions is July 5, the new measure likely wouldn’t appear until 2020.
“For too many years, state senators have promised Nebraska taxpayers property tax relief, yet no property tax relief is in sight,” said Doug Kagan, the group’s president.
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