Nebraska almost always ranks high when it comes to property taxes – the Tax Foundation ranks Nebraska's mean property tax rate as the seventh highest in the nation. Some farmers have reported property valuation increases of over 30% in recent years.

Ricketts discussed the issue at several meetings this winter, including the Nebraska Pork Producers Association Annual Meeting earlier this week.

TOP PRIORITY: Gov. Ricketts discusses property tax relief with the crowd at the Nebraska Pork Producers Association Annual Meeting earlier this week. Ricketts has said property tax relief is his number one priority this legislative session.

"Last year we made great strides in addressing this. We cut the growth of government nearly in half. There was 6.5% growth in the last budget, to 3.5% growth in the current budget," Ricketts said at the meeting on Wednesday. "The only way we can have sustainable tax relief is controlling spending. Because we were able to control spending, we were able to increase the property tax credit relief fund by over 45%. That means in this budget we will deliver $408 million in direct dollar-for-dollar property tax relief from the state to all property owners in the state."

A look at the details
In January, Gov. Pete Ricketts, Revenue Committee Chairman Mike Gloor, and Education Committee Chairwoman Kate Sullivan released a proposal for their property tax relief package. The two-bill package makes structural changes to how property taxes are levied on residential, commercial, and agricultural property, Ricketts said.

LB959, introduced by Sen. Sullivan, would limit schools' annual budget growth to 2.5% plus expected student growth, and limit the amount of unused budget authority that can be carried over from year to year. The bill would remove levy exceptions that don't require a vote for future capital projects for school district and community colleges.

Within the school funding formula, growth would be limited to 5% plus student growth for each district's target funding level, instead of the current 12%. The proposal would also allow target fund levels to decrease by 2% a year. "If you're losing student population, you shouldn't just keep spending the same amount of money, and you shouldn't just increase your budget because you can," Ricketts said. "It should be based on what you need to do."

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The other piece of the package is LB958, introduced by Sen. Gloor, which would tighten current spending limits on all local governments by removing exceptions that allow levy limits to be exceeded without voter approval – like exceptions for bonded indebtedness. It would limit the use of restricted funds budgeted for capital improvements, qualified sinking funds and services subject to joint agreements. It would also limit the carryover of unused budget authority to 3%.

LB958 would also limit the aggregate growth on agricultural land valuations to 3% per year in Nebraska. Ricketts emphasized that 3% is not a hard cap, but a limit on the aggregate values across the state. Just like before, the county assessor will determine the base assessment and provide a report to the Nebraska Department of Revenue. The department will then review the reports, and determine statewide aggregate adjustments to apply to all ag land by assessors to ensure the aggregate value doesn't exceed 3% growth.

For example, the Department of Revenue projects some landowners in north central Nebraska will see property tax valuations increase 18% this year. "It's not going to take 18% down to 3%, but it will take it down by a factor that may take it down to 13%," Ricketts explained. "What that will do is smooth out that growth in ag land valuations and slow it down."

Different perspectives on the package
Earlier this month, agricultural groups, including Nebraska Farm Bureau, Nebraska Cattlemen, and Nebraska Pork Producers Association indicated their support for LB958 and LB959.

"Nebraska ag producers, who represent a full 25% of the state's economy, need property tax relief," Nebraska Farm Bureau President Steve Nelson said in a press release earlier this month. "In the last five years, ag property taxes have increased over 100%. The bills brought forward by Governor Ricketts and Senators Sullivan and Gloor are an important step in providing structural relief for ag producers as well as residential and commercial property tax payers."

However, some school districts, cities, and counties have said LB958 and LB959 would create huge shortfalls for schools and other local governments, which are already facing spending limits, and make it difficult for K-12 schools and community colleges to address problems with infrastructure and maintenance.

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According to Lincoln-based Open Sky Policy Institute, which testified in opposition to LB958, the assessment growth cap proposed in the bill would lead to shortfalls for schools and other localities, tax shifts and would treat taxpayers disparately depending on where they live.

"Nebraska agricultural landowners have seen their property taxes increase dramatically in recent years but our research shows using an assessment cap to address this scenario is likely to create more problems than it solves," Open Sky executive director Renee Fry said in a press release.

Meanwhile, Ricketts noted some farmers and ranchers have said the LB958 and LB959 do not go far enough to help relieve the property tax burden.

"I think it's vitally important that we make structural changes to property taxes this year. We can't let the perfect be the enemy of the good," Ricketts said. "What we do this year certainly doesn't prevent us from continuing to work on this issue. I'm quite certain we will continue to work on this issue with regard to how do we address property taxes."

With this year's short legislative session, the outcome of the package will be determined by April 20. For additional information on the property tax relief package, visit governor.nebraska.gov.