Central Nebraskans enthusiastic about consumption tax, but mixed on ballot initiative

Participants in the recent Central Nebraska Virtual Property Tax Town Hall voted in five online polls about a variety of property tax-related questions. As with all of the Virtual Town Halls the Platte Institute is hosting this summer, the polls from these events are only the opinions of participants who made an effort to attend and can’t be assumed to be a representative sampling of all voters in the region.

Nonetheless, it’s useful feedback about the challenges and opportunities property tax reform might face in different areas of the state. For the second town hall in a row, participants expressed growing or consistent concerns with property tax issues in the midst of the COVID-19 pandemic and showed enthusiasm for implementing a consumption tax in place of most other state and local taxes. Among this group, however, there were more mixed reactions to other approaches to property tax reform.

Among these participants, the pandemic did not reduce anyone’s level of concern about property taxes. Instead, participants were evenly split between either being just as concerned as they were before the crisis and being more concerned now.

The consumption tax concept clearly has a lot of interest, and undoubtedly the chance to get rid of other taxes entirely sweetens the deal. Something to look for would be how soft this level of support would be once the negatives are presented, and there are negatives. In previous scientific surveys we’ve conducted, a significant number of voters like the idea of paying sales tax instead of property tax, but when you pose the reality of paying sales taxes on things like groceries, gasoline, and personal care services, which are not currently taxed under Nebraska’s sales tax, a lot of people have second thoughts.

Participants were mixed on a more modest reform proposal, which has also been introduced in the Legislature, but has not moved forward. Support and opposition for limiting property tax revenue increases to 3% annually were tied at 29%. Undecided respondents took the top spot at 43%.

This is a proposal that could be criticized by both sides for either putting too harsh a cap on property taxes or not harsh enough.

This presents another question to look for in the property tax discussion. We know these participants are concerned about property taxes and enthusiastic for reforms, but will they maintain their enthusiasm if a proposal offers a more incremental solution? A cap on the growth of property tax assessments is something Nebraska doesn’t currently have, but it also won’t cut property taxes, just prevent a larger increase.

Also, as worded, this measure would allow local voters to override the limitation. Some respondents may not like the sound of that if they already feel outvoted on property tax issues in their community.

For the second town hall in a row, most participants said they would prefer to cut spending to reduce property taxes, even if it required reductions in local services, including public schools, health programs, or road maintenance. Scientific surveys show there are certainly pockets of voters in Nebraska who feel this is exactly what has to be done, so the result should not be dismissed out of hand. However, the results also tend to flip in more populated districts, and even a proposal with 50% support is hard to maintain in Nebraska’s policy process.

The best chance for advancing this idea is likely at the local level. In the Legislature, even if 50% of Nebraska state senators wanted to make major cuts to government spending, a proposal generally needs 67% support to move ahead through a filibuster, and in a ballot initiative, a policy idea starting with 50% support will likely lose some of that steam once it’s subjected to an opposing campaign.

And finally, a plurality of respondents, 43%, said voters were best suited to advance the property tax reform issue in Nebraska. But undecided voters and supporters of the Legislature taking on the issue tied at 29%, denying the ballot initiative supporters of a majority. With the Legislature still in session, no one can hold it against anyone hoping the Legislature will act on property taxes, and there are certainly policy advantages for having senators take on the detailed work of an issue as complicated as the tax structure.

While it seems that advocates for a property tax ballot initiative already have some compatriots in Central Nebraska, they may also have some convincing yet to do.