Property tax, school funding ideas slowly taking shape


Associated Press

LINCOLN, Neb. (AP) - Nebraska lawmakers are creating a rough list of suggestions for lowering property taxes while covering education expenses, but they disagreed Thursday over how to pay for the tax reductions and schools.

The Legislature’s Revenue and Education committees floated ideas during a work session that stretched for nearly eight hours, as they prepared for a Nov. 12 public hearing at the Capitol.

The joint committee meetings are for generating ideas for bills when the Legislature convenes in January.

“There’s an awful lot of work to be done, a lot of good ideas, and not a lot of time,” said Sen. Mike Gloor of Grand Island, a co-chairman of the working group.

The biggest unanswered question is how lawmakers will pay for any measure that lowers property taxes. Some of the ideas included shifting where existing money is spent, phasing out sales tax exemptions and raising “sin taxes” on products such as alcohol and tobacco.

Sen. Kate Sullivan of Cedar Rapids said she hadn’t expected a clear consensus, and cautioned that lawmakers won’t produce a “silver bullet” solution for next year’s 60-day session.

“I think the public hearing will be helpful,” said Sullivan, the group’s co-chairwoman. “I think (the public) will have some things to react to - but it will also show them that this is a very difficult problem.”

Nebraska’s school aid formula distributes money by calculating a school’s needs and subtracting what it can generate through local property taxes and a few other sources. The difference between a district’s needs and its local resources determines how much state aid it receives.

The state’s public schools rely heavily on property taxes, but rising agricultural land values have forced farmers and ranchers to pay an increasing share of the cost even when their incomes decline. At the same time, urban senators with fast-growing districts want to protect state aid for their schools.

One idea that appeared to have the strongest support in the joint committee meeting was providing state “foundation aid” for every student in Nebraska. Distributing money by student would guarantee money for every district, including rural schools that have been forced to rely more on property taxes after losing state aid because their property valuations were too high.

Other proposals would ease school district levy restrictions and reduce the taxable value of farm and ranchland for purposes of school funding, which would allow schools to qualify for more state aid. One idea would allow school districts to receive 20 percent of the income tax revenue generated within their boundaries.

Lawmakers also weighed another funding boost to the state’s property tax credit fund, which reduces what property owners have to pay to local governments.

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