July 5, 2019
After 90 days, the 2019 Nebraska unicameral session wrapped up this spring after passing several bills affecting agriculture. This session, as in years past, property taxes were a top priority for several organizations, including those in agriculture and education.
Still, even after this year's long session, the Legislature failed to gain enough votes to break a filibuster and pass a bill providing what several groups would call "meaningful property tax reform."
Here is a roundup of some of the bills that were introduced this session, including several that stalled on the floor, that would have affected agriculture:
LB289. Introduced by state Sen. Lou Ann Linehan, the bill would have raised the state sales tax rate to provide additional funding for public education, helping to ease the burden on property tax payers. It would have provided a per-student foundation aid, as well as a guarantee that each school would receive state aid equal to a certain percentage of its costs, reduced the value of all property classes for purposes of calculated state aid, and kept intact a portion of the state's Property Tax Credit Relief Fund. The bill paid for these changes, in part, by imposing state sales taxes on several services and consumer goods.
Amendments included increasing an earned income tax credit to offset the effect of higher sales taxes on lower income working people and changes to school districts' maximum levies.
Many supporters, including the Nebraska Farm Bureau, saw it as a way to create new revenue — about $370 million — to fund education, easing the property tax burden and providing meaningful property tax reform. However, the bill stalled in general file.
Ansley Mick, director of Nebraska Farm Bureau's Political Action Committee and state governmental relations, notes in the future that more outreach will be needed on what bills such as this can provide for public schools.
"More than 170 of our 249 public school districts receive no state equalization aid,” Mick says. “Rural and many medium-sized school districts, many of which are unequalized, were supportive of LB 289, but urban schools expressed hesitation. Many in the Legislature believe there has to be a balance, and if the state provides more state funding for education, perhaps the state should have more say in school spending."
LB314. Introduced by state Sen. Tom Briese, the bill was similar to LB289. It proposed to increase the sales tax rate and eliminate certain sales tax exemptions. LB314 also would have created a remote sellers tax, eliminated some state income tax exclusions, imposed a surcharge on income more than $250,000, and like LB289, increased an earned income tax credit to offset the effect of higher sales taxes on lower income working people. Overall, LB314 would have generated more than $700 million, with $512 million going to the property tax credit relief fund and using a substantial portion of the remaining funds to increase special education funding for K-12 schools from 51% to 80%.
LB183. Also introduced by Briese, in its original form, the bill proposed to adjust ag land values to 1% of their market value for the purposes of school bond issues.
"The adjustment only applied to ag lands. It still left residences and farm sites taxed at 100% of fair market value," explains Bruce Rieker, vice president of governmental relations at the Nebraska Farm Bureau. Under the current scenario, producers in school districts with large amounts of ag land have found themselves footing a significant amount of a bond issue passed by many nonagricultural landowners.
Via amendments in the Revenue Committee and on general file, the bill was amended to adjust valuations to 50% of market value. In the waning days of the session, LB 183 became the last hope for any meaningful property tax relief.
An amendment to LB 183, proposed by Briese, would have eliminated more than $100 million in sales tax exemptions to generate new revenue to go toward the Property Tax Credit Relief Fund. However, the bill stalled in select file.
LB103. Introduced by Linehan and passed by the Legislature in March, the bill requires political subdivisions — including counties, school districts and Natural Resources Districts — to hold a public hearing and an affirmative vote before collecting more property taxes than the previous year if property valuations increase.
"If levies remain the same, and the valuation doubled on someone’s house, commercial property or ag land, there would be a windfall," Rieker says. "A political subdivision could collect twice as much property tax without doing anything. Now, they must affirmatively vote to keep the levy at its level if they want to collect those taxes. LB103 is about political accountability."
LB227. Introduced by state Sen. Dan Hughes and passed by the Legislature in May, the bill expands legal protections provided under Nebraska's 1982 Right to Farm Act. The bill creates a two-year statute of limitations on nuisance lawsuits brought against a farm or public grain warehouse. Senators voted, 46-2, to pass LB227.
"Based on conversations we've had with people in various states, including North Carolina Farm Bureau and its pork producers, we thought we should be proactive and get some clarity for nuisance lawsuits," Rieker says. "LB227 is a good start and shows what can happen when people roll up their sleeves, put aside parochial interests and work toward a common goal."
LB657. Introduced by state Sen. Justin Wayne and passed by the Legislature in May, the bill provides authorization for industrial hemp production in Nebraska. The window of opportunity was short this year — growers had until June 28 to apply for a license through the Nebraska Department of Agriculture to grow hemp in 2019 — so don't expect to see much production until next year.
Under the guidelines put in place by the 2018 Farm Bill, Mick notes industrial hemp growers are required to keep THC (tetrahydrocannabinol) levels below 0.3%. Fields that test above this are considered "hot" and must be destroyed.
And questions remain regarding processors and market access, whether farmers are growing hemp for grain, fiber or CBD (cannabidiol) oil production.
"Hemp gives Nebraska farmers another market option,” Mick says. “Similar to hops production, there are niche markets. Industrial hemp is used for oils, seeds are edible like flax seeds, and the grain is used in pet foods. The demand is there. Now we just need to find the middle man that's going to process industrial hemp products."
LR166. Introduced by state Sen. Curt Friesen, the bill established subcommittees to review a report by the Rural Broadband Task Force created by LB994 in the 2018 unicameral, to study and put together a report on issues relating to rural broadband development and availability.
Part of this reporting will involve more detailed data on broadband availability in rural Nebraska.
"With some of the rules associated with mapping, unfortunately it only goes as deep as a census block," Rieker says. "If an internet provider provides service to one resident in a census block, the Federal Communications Commission determines that particular area is handled and services are being provided. If there are other companies interested in providing a service to all those unserved, they're not going to be able to get any federal or state assistance through the state or federal universal service funds."
While this legislative session didn't yield the property tax solution many farmers and ag landowners were hoping for, Mick and Rieker note there are conversations moving forward and a stronger sense of optimism for finding a legislative solution to Nebraska's property tax problem.
Although some stakeholders have discussed the possibility of a ballot initiative to provide property tax relief, as in previous years, Mick and Rieker point out a legislative solution is preferred. Possibilities for next year include expanding the tax base, which the Revenue Committee has been focused on this past legislative session.
"Our goal working with them is to have as much of this done and have an agreement reached prior to them convening in January," Rieker says. "It's encouraging to see more urban and rural senators coming together to figure out how to reduce the state’s overreliance on property taxes and to look at how we fund schools."
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