Closing Nebraska’s property tax honesty gap with Truth in Taxation

Republished from Nebraska Examiner

Recent reports that Omaha Mayor Jean Stothert’s proposed 2023 budget contains no tax increase is a prime example of an honesty gap in how Nebraska leaders discuss local property taxes.

In fact, the proposal would increase property tax revenues more than 6%.

Even I should accept some blame for the honesty gap. As past president of the Omaha City Council, I loved telling voters their property tax rates stayed flat on my watch. While that gave me cover as an elected official, it didn’t help my constituents. Their taxes were still increasing due to rising home and property values.

A new state law bridges this honesty gap with Truth in Taxation, making officials admit that property taxes are being increased, even when tax rates remain steady. While the Unicameral Legislature can have a role in reducing Nebraska’s high property tax rates, any sustainable state action requires local governments to be held accountable for their tax and spending policies.

The philosophy of Nebraska’s new Truth in Taxation law is simply that levying property taxes should be transparent and easy to understand. If property values substantially increase for cities, counties, school districts or community college districts, these boards must justify to taxpayers why they should collect additional property tax revenue.

Elected boards are no longer entitled to a windfall because of quickly rising assessments. It’s well-known that home prices are rising partly because of an inflationary economy, with too few homes being built to meet Nebraskans’ needs.

If locally elected boards can’t make a solid case and vote for a tax increase when all taxpayers have been informed, then the law requires the local property tax asking to be reduced below a 2% threshold set in the law.

This type of law has been working well in Utah since the 1980s to keep property taxes in check. Truth in Taxation hearings are often well-attended by Utahns, and local governments seeking tax increases come prepared when asking for more revenue.

Recent evidence shows other states are capable of replicating Utah’s success. Kansas passed a Truth in Taxation law in 2021. This year, 52% of property taxing subdivisions in Kansas are not going to take in more property tax revenue than the year before.

Because Nebraska already has the country’s eighth-highest property tax rates, rising valuations hit our people more than taxpayers living in other states. Increasing the burden on already-aggrieved taxpayers should not be treated as automatic or routine.

The Truth in Taxation process has two main steps for taxpayers. First, local boards that seek to raise their overall property tax request by more than 2% — plus real growth, including new construction and annexation — must notify taxpayers about their plans by postal mail.

Counties will send taxpayers a Truth in Taxation postcard in early- to- mid-September outlining the proposed tax increases. Second, taxpayers will have the opportunity to attend a public Truth in Taxation hearing. The postcard will contain hearing information for subdivisions on your tax bill. All political subdivisions proposing a tax increase must send a representative to the Truth in Taxation hearing to explain the desired increase, take public comment and share their contact information.

So that the maximum number of people can attend, state law requires that Truth in Taxation hearings occur after 6 p.m. on a date between Sept. 17 and Sept. 28.

Only after this process is complete can political subdivisions such as the City of Omaha take a recorded vote to increase property taxes.

Economic concerns about property taxes are widespread and sincerely held across Nebraska. But in most cases, Nebraskans have not been made aware of what they can do to keep elected officials honest about the property tax burden.

If Nebraskans like you use the Truth in Taxation law to get involved, you can increase the balance of power between those who collect taxes and those who pay them. To learn more about participating in Truth in Taxation, please visit PlatteInstitute.org/Truth.

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