Legislative Testimony for LB408: Adopt the Property Tax Request Act

Good afternoon, Chairwoman Linehan and members of the Revenue Committee. The Platte Institute is in SUPPORT of this legislation.

This morning you heard me talk about LR22CA, which is essentially the same proposal except in a constitutional amendment format. While we support and recommend voters having a voice in their government whenever possible, we know that Nebraskans want property tax limitations. One benefit to LB408 is that it allows this limitation to go into effect immediately.

If there is support to advance LR22CA, then I encourage this committee to also advance this legislation so Nebraskans can have immediate action on the growing burden of property taxes.

We would, however, recommend an amendment to only allow the political subdivision to exceed the limit during a general or primary election. Special elections have less voter turnout as well as increased costs to the sponsoring political subdivision. If only general or primary elections were allowed, it would save the sponsoring subdivision the cost and administrative burden of managing another election while also allowing for a larger participation from the public in the democratic process which would directly impact their property tax bill.

A benefit to the way LB408 is structured is that this cap does not restrict the total revenue of a political subdivision growing at an annual rate greater than 3%. In the case of school districts, for example, revenue sources like state aid, motor vehicle taxes, or fines are not included in the calculation. In cities, local option sales tax, occupation tax, and utility rates would not be included in this figure.

While beneficial, this can cause unintended consequences where political subdivisions might increase their fees or taxes on these other revenue streams to offset any lost property tax revenue. If enacted, it would be prudent of this committee to annually review all the political subdivisions in the state that experience a total revenue increase of greater than 3% to ensure this “offset” is not occurring.

It should also be acknowledged that this policy is not the only property tax limitation that needs to be considered by the Legislature. Overall, LB408 a good starting point for additional property tax limitations, and it avoids many of the unfair pitfalls of other property tax caps. But it should not be the end of the property tax reform discussion if the Legislature wants to reduce the overall property tax burden.