Nebraska is often ranked as one of the top states with the worst property taxes. A 2017 Wallet Hub article ranks Nebraska seventh in terms of real estate tax burden based on national median home values — although median home values in Nebraska are lower than the national median.

It's something farmers and ranchers in the state know all too well; many can say down to the acre how much their property taxes are costing them.

"On average, Nebraska farmers and ranchers pay anywhere from $80 to $120 per acre," says Ansley Mick, director of Nebraska Farm Bureau's Political Action Committee and State Governmental Relations. "It can be hard for people to comprehend how much higher it is compared to other states."

Despite property tax relief being one of the top priorities of ag organizations, farmers, ranchers, homeowners and small-business owners in the state, the 2017 unicameral session wrapped up in late May without passing property tax relief or reform. Several pieces of legislation were introduced in regards to property tax, but none were approved.

• LB461. Perhaps the most heavily-debated of these was LB461, introduced by Sen. Jim Smith. LB461 included provisions from LB337, which would have reduced the current four individual income tax brackets to three by combining the first and second brackets into one. The new top bracket rate would decrease when projected rate of growth in state general fund receipts exceeds 3.5%. Using a similar mechanism, the bill would reduce the top corporate income tax bracket rate.

Nebraska Farm Bureau, Nebraska Farmers Union, Nebraska Ag Leaders Working Group and Reform for Nebraska's Future opposed LB461, arguing that because it emphasized income tax reductions, it would result in a greater property tax burden. According to a Nebraska Farm Bureau study, the legislation would provide $10 in income tax cuts for every $1 in property tax relief.

LB461 included provisions from LB338, which would have capped aggregate ag land value increases at 3.5% over the prior year. Capitalization rate would change to result in an aggregate ag land value between 55% to 65% of the actual value – a decline from the current 72%. Farm Bureau and other opponents of the bill didn't oppose the cap, but noted because the cap affects the aggregate value statewide, not all ag land owners would see a reduction in property taxes. The bill also did not address the state’s overreliance on property taxes, meaning costs would have likely just shifted to other types of commercial property and residences.

• LB640. Introduced by Sen. Mike Groene, LB640 would have limited property tax dollars to local schools to 55% of their total general fund revenue. The school would receive dollars from the Property Tax Credit Fund equal to the next 35% of the school's general fund revenue. For districts receiving property tax relief aid, expenditures would be reduced by 10% unless the school board votes to override the reduction by a two-thirds majority vote.

Nebraska Farm Bureau and other groups supported the cap, but opposed the bill because it relied on Property Tax Credit Fund dollars, and there were no provisions to decrease the 55% cap over time.

• LB44. Introduced by Sen. Dan Watermeier, LB44 would tax sales by online retailers with no physical presence in Nebraska, with the goal of leveling the playing field for brick-and-mortar companies. Supported by Farm Bureau and other organizations, the bill was advanced, but stalled on select file.

• LB601. Introduced by Sen. Steve Erdman, LB601 would have ensured all revenue from internet sales tax would go to the Property Tax Credit Relief Fund.

• LB312 and LB313. Introduced by Sen. Tom Briese, both would have increased the sales taxes base. LB312 would have expanded the sales tax base by eliminating certain sales tax exemptions, while LB313 would raise the state sales tax rate from 1% to 6.5%. Both would have raised the State's Earned Income Tax Credit from 10% to 17% of the federal EITC. The revenue from LB312 ($225 million to $250 million annually) and LB313 ($275 million annually) would go toward property tax relief.

• LB409. Introduced by Sen. Groene to update statutes for the biennial budget. Sen. Curt Friesen introduced an amendment which would have eliminated certain income tax loopholes, helping to ease the property tax burden. The amendment also lowered the local effort rate to $1.02, meaning more schools would qualify for state aid. While LB409 was signed into law, the amendment was not.

• LB265. Introduced by Friesen, it would amend the school finance formula to provide a minimum amount of state aid for each school without taking away money from schools already receiving state aid. The legislation would provide that each local system would receive a minimum amount of aid under the formula beginning with $1,500 each year, and increasing to at least $5,500 per student for the fiscal year 2022 to 2023. The goal is to provide property tax relief while creating new revenue to fund schools.

Looking to 2018

There were several challenges with getting property tax relief legislation passed this year, Mick notes.

"Some elected leaders told us they weren't hearing about property taxes which was unfortunate. If they weren’t hearing about property taxes, it was because they weren’t listening. Several voter surveys leading up to and during the session indicated nearly 80% of the voters want property tax relief."The budget was also a factor. With the over $1 billion budget shortfall the state is facing, it's difficult to reduce both income taxes and property taxes in the same session.

Meanwhile, some friction was rooted in the lack of a single piece of legislation addressing the entirety of provisions for property tax relief and reform.

"That is our No. 1 goal for next session – having one or two bills that say this is what we need, this is the answer. Doing so will provide a structure, a blueprint to move forward," Mick says. "I think we have a lot of rural and some urban senators that support property taxpayers in our pursuit of reform, and we need to have a straightforward plan for them to rally around."

"If it takes a portfolio of bills to create that legislative prescription, that's what we'd like to do," adds Bruce Rieker, Nebraska Farm Bureau Vice President of Governmental Relations. "In the interim we're planning to work with senators and stakeholders to get that ironed out so we have agreement going into the legislative session. That’s a much better approach compared to piecemealing something together during next year’s 60-day session."

While several bills, (312, 313, 265 and 144) never left committee, and others were stalled in general file (461, 640, and 601) or select file (44), similar bills will likely be introduced next year, adds Rieker.

"They won't be identical to bills introduced this year, but there will likely be some variations that could be a combination of existing bills and some new ideas," Rieker says.