Legislative Testimony for LR21CA: Constitutional amendment to require the State of Nebraska to pay all classroom expenses related to the operation of public elementary and secondary schools
The following is written testimony provided to the Nebraska Legislature’s Education Committee.
Dear Chair Walz and Committee,
Please accept this letter of SUPPORT for LR21CA. I request that this letter be included as part of the public hearing record.
The Platte Institute’s motivation for supporting LR21CA is because of the excessive pressure Nebraskans feel about rising property taxes in the state. Approximately 60% of property taxes are levied by the local school districts, making them the largest driver of the increased burden.
We recently conducted a poll of Nebraskans and asked them:
If you could pick one tax that you would like to see reduced, which would it be?
Of the six options we gave, property taxes were the most chosen tax, garnering 55% of the vote.
We know that many senators have looked at reforming the way Nebraska pays for public education to deliver property tax relief. We believe this is an appropriate way to fundamentally address the property tax issue in Nebraska.
According to a Congressional Research Service report[i], “over the last several decades, the share of public elementary and secondary education revenues provided by state governments has increased, the share provided by local governments has decreased…”
It is not unreasonable to consider a proposal to allow citizens to vote for this change in how public education is funded in Nebraska. Michigan gives a very good case study for how this would affect property taxes.
Michigan had a similar situation to Nebraska where school districts had general property taxing authority and assessed millages on all real estate in their jurisdiction for general operations. In 1994, voters approved Proposal A (a constitutional amendment) that completely changed how the state funded public schools.[ii] The state reformed the property tax system, resulting in a substantial reduction in property tax rates, and increasing state funding for public education from a previous +/-30%- to +/-70%. Today, Michigan ranks 10th in state funding for education, while still maintaining the 14th best Tax Foundation State Business Tax Climate Index ranking
In addition to Michigan’s success story, we believe the people of Nebraska should be given the opportunity to vote on such a measure. Another question we asked in our poll was:
Another option for significantly reducing local property taxes would be for the State of Nebraska to take a greater role in funding public schools. However, opponents say this would reduce the amount of local control school districts have over spending and other priorities. Would you support or oppose the state taking over most funding decisions for public schools if it meant your local property taxes would be reduced?
- Strongly support – 23%
- Somewhat support – 23%
- Somewhat oppose – 19%
- Strongly oppose – 21%
- Unsure – 15%
It is important to note that 46% of respondents support the idea while only 40% oppose the idea. While this is a close result, it does indicate that a significant plurality of voters are already open to the idea of the state taking a stronger role in K-12 finance.
The next question will come to funding this significant reform. Because this is a CA, we do not have a fiscal note to reference, but we do know with the multiple property tax relief programs administered by the state there is ample revenue to accommodate for this change.
If this measure were to pass, the state could redirect the funds allocated towards the LB1107 income tax credit for property taxes, the Property Tax Credit Relief Fund, and the specific business incentives targeting property taxes into funding for public education.[iii] In addition, the state can broaden its sales tax base to include services, which our polling has shown Nebraskans support as an alternative to property taxes.
Property taxes are a long overdue problem in Nebraska and LR21CA is a valid policy measure we should approve to allow the voters to decide how they want to move forward.
[i] Skinner, Rebecca R (August 26, 2019). State and Local Financing of Public Schools. Congressional Research Service Report #R45827, retrieved from https://www.everycrsreport.com/reports/R45827.html.
[iii] Briese, Tom (February 22, 2021). District 41 update. Hastings Tribune, retrieved from http://www.hastingstribune.com/news/state/nebraska/district-41-update/article_a8089cea-1c3f-5942-9872-3fdcf6efb38e.html.