Legisative Testimony for LB103: Change provisions relating to property tax requests
Good afternoon Chairwoman Linehan and members of the Revenue Committee. I am here today to testify in support of this bill.
Nebraska currently has the 7th highest property tax in the nation and is in need of property tax reform that addresses the underlying problem of a local tax system that imposes too great a burden on the state’s economic growth.
Much of the property tax reform discussion revolves around revenue, but the policy included in LB103 focuses on another important factor, which is property tax limitation. The Platte Institute supports LB103 because it strikes the right balance of state law providing a check against automatic local tax increases, while still maintaining the ability for local communities to decide what’s right for them.
LB103 also recognizes the importance of the public’s involvement with their government and allows a public hearing before a property tax increase can be decided upon.
LB103 is timely because analysis conducted by the Kansas City Federal Reserve Bank[i] found that property valuations are one of the main components to our state’s extraordinarily high property tax burden.
Average price gains in all areas of the state during the last year have been the strongest seen in a four-quarter period since the mid-1990s. The Kansas City Fed’s analysis found that prices have strengthened most outside of the major metropolitan areas, which is why we are seeing concerns with valuations in the rural parts of the state.
But urban areas, which often have higher levies, are increasingly impacted as well. Overall, the Kansas City Fed report finds that Nebraska’s housing market has experienced the 6th strongest rate of growth in the entire country over the last decade. This analysis is supported by news stories we are seeing across the state. As an example, a Lincoln Journal Star article[ii]cited a 17 percent increase in commercial and industrial property valuations in Lancaster County last year. (I have included a copy of the Fed’s analysis with my testimony).
Last year the Platte Institute did extensive research into the property tax issue. We’ve come to the conclusion that the only way to substantially and sustainably reduce property taxes is to pair an expansion of the state and local tax base with appropriate limitations on property taxing authority at the local level.
While LB103 does not immediately reduce the amount of revenue collected at the local level, it does create an important limitation to prevent automatic tax increases without input from taxpayers. It also requires elected boards to go on record about how much additional revenue they think is really necessary when valuations increase.
We also have new evidence that voters want this committee to focus on property tax limitations this session.
The Platte Institute has conducted a new scientific survey just this month, collecting responses from over 2,000 Nebraskans who are represented by the members of this committee. We asked them what they think about property taxes and different reform options.
While we aren’t ready to release the full details of that poll yet – you will be getting copies in the near future – I can share with you some themes that were found and how they relate to LB103.
A strong majority of Nebraskans supported a new state law to further limit how much property tax local taxing subdivisions could collect, either by limiting property tax rates or valuations.
Strong majorities of voters across all eight districts support this concept. But what’s even more impressive is that at least a plurality of Republican, Democratic, and independent voters feel the same about the need for firmer property tax limitations in 7 of 8 of your districts.
We find that LB103 goes a long way toward addressing these concerns shared by these Nebraskans, and would put a lot of taxpayers at ease as this committee discusses other policy changes, including new revenue options.
For these reasons, I encourage the committee to vote in support of LB103. Thank you and I would be happy to take any questions.