Legislative Testimony for LB60: Change provisions related to community college levies
Good Afternoon, Chairwoman Walz and members of the Education Committee. My name is Nicole Fox, and I am the Director of Government Relations for the Platte Institute. I am here today to testify in opposition to LB60.
Community colleges are just one of the many political subdivisions in this state with property tax levying authority. Currently, community colleges may levy a tax not to exceed ten and one-quarter cents per one hundred dollars of taxable valuation of property to support operating expenses. In addition, they may levy a tax not to exceed one cent per one hundred dollars of taxable valuation of property for the purposes of paying off bonds and establishing a capital improvement and bond sinking fund.
The intent of LB60 is to eliminate these two levy distinctions and allow for a single 11.25 cent maximum levy, so that community college boards do not have to decide on how much they need to budget for general operating expenses and capital investments separately.
While this may seem less onerous for the boards, the Platte Institute is concerned about how this change will ultimately affect property taxpayers.
To illustrate our concerns, I would like to point to 2016. That year, Southeast Community College put a $369 million bond proposal on the ballot for facility upgrades and construction. The bond issue was overwhelmingly rejected by voters.[i] Following the bond proposal’s failure, the board voted in 2017 to raise the college’s property tax levy from 7.52 cents per $100 of valuation to 9.07 cents per $100 of valuation, although still under the 10.25 levy limit, this was a 21% tax increase.[ii]
There exists a familiar saying, “bonds don’t increase your taxes.” Educated taxpayers are savvy as to how the proposal of bonds works. When a political subdivision finds itself on the tail end of a bond payoff period, it realizes that it can borrow more money without taxpayers paying a higher levy than they do currently. More bonding gets proposed to replace the bonding that was paid off, therefore appearing that taxes stay the same. At the end of the day, the political subdivision will get more money, particularly as valuations rise.
If the proposed levy distinction elimination and likely tax levy increase is used in place of bonding, will levies be lowered once the capital improvements are complete, or will more new construction be proposed, and the higher levy remain the same?
The 2016 bond issue failed because voters did not want the added tax burden the bond would impose.
Nebraskans are begging for reforms that reduce the burdens to their pocketbooks because their property taxes are already so high.
We polled nearly 3,000 Nebraskans in 8 legislative districts in 2019, 62% of whom told us they favored stronger limits on property tax levies and valuations. If LB60 were to pass, community colleges could simply use as much authority as possible to pursue capital construction projects and bypass the voice of the taxpayer.
People in Nebraska are hurting. The pandemic has caused job loss and business closures. People are already struggling to pay their rents, their mortgages, and their tax bills. Nebraska already has the country’s eighth highest average property tax rate on homeowners. Now is not the time to introduce proposals that could impose additional burden on taxpayers.