Preparing for Truth in Taxation, Nebraska’s Property Tax Transparency Law

Jim Vokal and Laura Ebke discuss how you can help keep Nebraska property taxes in check and learn more about Nebraska’s new Truth in Taxation law at PlatteInstitute.org/Truth.

A transcript of this episode is available below.

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Episode Transcript

Jim Vokal: The real estate property tax is easily the most hated tax in Nebraska, and yet Nebraskans are often completely unaware of the local government process that determines how high their property taxes will be every year. Everyone listening to this episode has a chance to change that now because Nebraska has a new property tax transparency law, called Truth in Taxation, that will directly inform you about property tax decisions made by your city, county, school board, or community college, and how to get involved if you’re concerned. And stay tuned until the end of this episode, when I’ll share how you can access more free resources to help you participate in keeping property taxes in check in Nebraska.

My guest today is one of the very earliest advocates of Nebraska’s Truth in Taxation law. She’s a political scientist, has served as a school board member, and even as a Nebraska state senator chairing the Legislature’s Judiciary Committee. But maybe best of all, she’s putting all that experience and insight to work as our Senior Fellow at the Platte Institute. Laura Ebke, thanks for joining me on Nebraskanomics today.

Laura Ebke: Thanks for having me, Jim.

Jim Vokal: All right, Laura, Truth in Taxation is an idea we’ve been working on to enact for some time at the Platte Institute, but now that it’s law in Nebraska, we’ve got to make sure Nebraskans actually know about it and how to use it. So, let’s just start at the beginning, what is Truth in Taxation, and why does it matter?

Laura Ebke: Well, Truth and Taxation is really just an increased level of transparency in the taxing and spending process. It requires that those entities which receive property tax revenues—we sometimes refer to those as taxing subdivisions—will be required to directly inform property taxpayers if their budget for the next year would require more than a two percent increase in property tax revenue over the previous years. OK, so in that case, there would be special public hearings, following postcard notifications about the hearings. Ultimately, I mean, it’s important to remember that Truth in Taxation itself doesn’t cut property taxes. It doesn’t prevent local governments from raising more money via property taxes, but it does bring the process into full sunlight for the taxpayers—informing them, providing a specific location and time where they can attend hearings for multiple subdivisions at the same time, and it allows them to express their opinions about the increase, and expands the exchange of ideas between elected officials on local governing boards and also those paying to support those local governing boards’ work. So, I mean, I think it’s important to remember that it’s a transparency issue and it increases the engagement, hopefully, of citizens.

Jim Vokal: I think Nebraskans who are already attentive to property taxes are aware that they get a property tax bill every year and prior to that they get a notice if their property assessment is expected to increase or not. I think sometimes taxpayers protest those valuations, but they assume win or lose, the process is over after that. So now that Truth in Taxation is on the books, in what way does Truth in Taxation add more light to how taxpayers can address their concerns, Laura?

Laura Ebke: Yeah, you know, it seems like a lot of people—even those of us who do pay quite a bit of attention to our assessments and property tax bill, and even look at the year over year comparisons like I do sort of compulsively—they still miss out on holding our elected representatives accountable. You know, I live in a rural community, in a rural county. And as I was looking at our tax bill the other day, we have 10 different tax lines on our statement, including the county, and the city, and the school board, and the natural resources district, the community college, the county historical society—who knew that, you know, most of us don’t even know that there is a county historical society, right? And a couple of bonds that the school and county are close to retiring. And of those ten tax lines on my tax statement, six are increasing my taxes in double-digit percentages, so admittedly, valuation increases in particular neighborhoods can affect those increases, as can changes in tax levy by those taxing entities. But if my taxes are going to increase by 12 or 15 percent, I wouldn’t be surprised to see overall spending increases of 5% or more in several of those taxing subdivisions.

So when I was running for the Legislature one of my colleagues on the school board said “Hey Laura, you know, you could you can brag about the fact that in the 12 years you were on the school board, you weren’t part of raising taxes.” And indeed, the board lowered the levy consistently, but as a friend in the Legislature used to say to me all the time, “People don’t pay in levies—they pay in dollars.” And so, Truth in Taxation really requires truth in total spending dollars, comparisons over the previous years, not a comparison of levy rates. Because in an era of increasing valuations, it’s pretty easy for the government to claim tax cutting while spending and taking more of our money. Truth in Taxation won’t stop that, again, it will require more deliberate transparency and provide better opportunities for citizens to participate.

Jim Vokal: Another way to frame it is property tax collections versus whether or not they lower the rate or not, correct?

Laura Ebke: Absolutely, yeah.

Jim Vokal: All right. September’s going to be Truth in Taxation month in Nebraska for taxpayers and taxing subdivisions. I want you to put your school board member hat back on now and walk us through what both groups are going to be doing throughout September. In what ways will it be different than when you served on the school board in Crete, and what will be the same?

Laura Ebke: Yeah, I think the process had changed even while I was in the Legislature in terms of some of the tax hearings, but while I was on the school board in Crete for 12 years, beginning back in 2003, I recall this as being a really busy time of the year from a budget standpoint. And there’s several reasons for that. You know, the final approved budget for each school district has to be filed with the State Department of Education and the Auditor of Public Accounts—or the state auditor—by September 30^th, and so everything works backwards from there. Before filing the budget, we had to have properly noticed budget hearings, and then a hearing was set to determine what our property tax request would be. In my time on the school board, we typically held our special meeting toward the end of August, because the county had to certify the tax assessments by August 20^th. So after those final valuations were certified, then we had a rough idea of how much money was going to be available, we would have the budget hearing. And those would typically last about 15 minutes, at least in my community, because people—you know, I think I can count on one hand the number of people who showed up for one of our budget hearings, and so I think that’s one of the important things about Truth in Taxation, is that it provides that more explicit notice.

And so after that, in early September in conjunction with a regular meeting on the same night, we’d have a tax request hearing, usually as a separate meeting before the regular meeting. We’d close that typically after about five minutes, because no one showed up. And then, you know, then we’d approve the request for the property taxes to be made to the county, and our final budget as part of the regular meeting would be afterwards. This year, some of those potential elements—added elements—first, you know, I think it’s still important that our local entities are doing more than just the minimum in terms of notice of their budget hearings, I think that will save them a lot of hassles in the future. They should embrace public participation as much as possible. But second, after the budget hearing, a determination of changes to the budget will need to be made, and they’ll have to, you know, have their tax request and this year the added focus is going to be on the spending side of the budget. Every school district in the state has sort of a free pass on some spending increases—the allowable growth rate or real growth percentage plus two percent—the system has a little bit of an increase each year cooked in because it assumes increased staff costs, utility rates, and so forth. But once you get to that point, the real change is going to happen for citizens, if a school board or other entity wants to increase the money they’re spending by more than two percent over the real growth rate. And that’s when those Joint Public Hearings kick in, and you have to actually give people the opportunity to talk for three minutes at a time and all that sort of stuff.

Jim Vokal: All right, let’s talk about these Joint Public Hearings a little bit more. So let’s lay this out: on an evening between September 17th and the 28th this year, there will be a Truth in Taxation hearing in every county. The law requires every hearing to be held after 6 pm so most taxpayers can attend and everyone will get a Truth in Taxation postcard providing the hearing information. Boards seeking a property tax increase will have to make their case at this hearing, as you suggested Laura, and then take public comment. There’s no limit on how many people can speak, so everyone is welcome to attend.

Laura, tell us about the information boards will share with taxpayers at these hearings, and for our listeners who want to provide public comment, what kind of message should they be preparing if they want to make an impact on the decision-making process?

Laura Ebke: Sure, well, school boards and others will be making the case for why this year, you know, their budget should exceed their allowable growth rate. Some of those school boards are going to argue that because of a teacher shortage they’ve got to increase the teacher salaries more than normal, and since payroll makes up over 50% of the expenses of most school districts at least back in my day, that will mean that that they’re going to have extra expenditures that they’re going to have to make that will require them to go over the limit. Others will argue that gas prices and other inflation factors for busing students are an added burden, or that extracurricular activities are an excuse that demands more money. And while some will argue that this is the case, I don’t really think that most school boards are trying to just throw money into the wind most of the time, but I also think that they don’t want to make hard choices. They don’t want to make hard decisions about areas of where to cut, if they don’t have to. So they’ll toss out all of the reasons for why they think they need to increase their spending, and then it’ll be up to the citizens to make the case for why they shouldn’t spend that money, right?

You know, as a former board member, a former legislator, the constituents who made the greatest impact on my decisions were the ones who could be concise, and respectful, and could tell a good story. You know, no one likes to get yelled at, and I would encourage people to remember that school board members in Nebraska get paid nothing to be there, so treat them with a little bit of grace, if you can. Give them your best pitch for why increased taxes or their spending priorities will be harmful to you and your community, and maybe above all, especially when there’s an unlimited amount of time, respect the clock. If you have three minutes, plan your testimony so that it doesn’t go on for more than three minutes. If you go to the hearing to watch and then spontaneously want to express an opinion, but haven’t prepared your thoughts well, go up introduce yourself, tell them that you oppose or support their proposal, and leave it at that, especially someone else’s comments expressed what you were thinking. I always felt like sometimes the shortest comments are the most appreciated, especially after you’ve been sitting for a couple of hours listening to people, so I mean I think that those are the things for citizens to keep in mind, I think.

Jim Vokal: As a former elected official, I echo the feedback that you just provided on what is an effective piece of testimony, so I appreciate that. At the time of this recording, Truth in Taxation is practically a brand-new law in Nebraska. It’s been used in some other states for a long time now in various forms, notably in Utah, but Nebraskans naturally have questions: Who’s holding cities, counties, school districts, and community colleges accountable for adhering to this transparency process, Laura? Are there consequences if taxpayers aren’t properly informed? And what are some of the questions about the process we haven’t answered yet, because Truth in Taxation is new to Nebraska—and then finally, how can Nebraskans make sure they get answered through their participation?

Laura Ebke: Sure. Well, you know, I was doing a little bit of digging around to bring myself kind of up to speed on the details of the bill and the new process. And a Google search suggests that the Auditor of Public Accounts, or the state auditor, has published a lot of information for schools, municipalities, and all of the other entities that have to abide by Truth in Taxation, so if you follow their guidelines, the local entities ought to be in pretty good shape. Unfortunately, there aren’t a lot of penalties involved when it comes right down to it. I mean, you know, the local entities can get a, you know, slap on the wrist for failing to enact what they need to do. There is a requirement that the county clerk will provide a record of the hearing to the various political subdivisions, and that would presumably be available to members of the public as well, the big questions that I would have as a taxpayer and as a former school board member is the timeline. Especially for boards that typically only meet once a month like my local school board, we may find that adding the joint hearings during the 10 or 11 day period late in September puts groups kind of behind the 8-ball when it comes to, you know, filing their final budgets, especially if board members decide to rethink their budgets a bit after their special hearing. Another question that I have is the real growth rate, plus two percent. You know is that a low enough figure to actually trigger many of these joint hearings? I think that if it doesn’t—if we find out after this year that it doesn’t trigger enough of those hearings—and if citizens still want accountability and property tax reform in local spending, then there may need to be an amendment made to that law. And finally, the real key, I think, to holding officials accountable for this process is in the hands of the taxpayers. They have a right to attend all meetings, not just these joint public meetings, and comment, and ask questions. You know, we often hear that famous quote on the north side of the Capitol: “The salvation of the state is the watchfulness of the citizen,” and I think citizens who are concerned about authority, not just in the schools, but everywhere, you know, need to pay attention to what’s going on in their local taxing entities. How many of us have ever been to an NRD meeting or a county historical society meeting? So know what’s going on, know how they’re spending your money, and then hold them accountable for what they want to spend more for.

Jim Vokal: And if you’d like some help preparing for Truth in Taxation in September, you can visit PlatteInstitute.org/Truth and sign up for our Truth in Taxation Alerts. We’ll be providing free resources that will empower you to have a say about your local property tax bill this year, and every year. Once again, you can find free Truth in Taxation resources at PlatteInstitute.org/Truth.

Laura, thank you for helping our listeners get prepared for this major opportunity, and for joining me today on Nebraskanomics.

Laura Ebke: It’s a pleasure, Jim, thanks.