Legislative Testimony: LB987, Adopt the School District Property Tax Limitation Act

Good afternoon, Chairwoman Linehan and members of the Revenue Committee. My name is Nicole Fox. The Platte Institute SUPPORTS LB987.

Local school districts rely to a large degree on property taxes to provide the high-quality education Nebraska’s children deserve and for which they have a right.

As I stated during my LB986 testimony, our research indicates that 77% of Nebraskans are concerned about their ability to afford paying their property taxes either now or at some point in the future, and 60% have favored a constitutional cap on the annual growth of property taxes.

Like LB986, LB987 falls in line with Nebraskans’ desire to adequately fund schools while putting in place measures to keep increases in property taxes at a reasonable level.

LB987 would prohibit school districts from raising property taxes beyond the greatest of real growth, 3% base growth or Consumer Price Index (CPI) inflation, whichever is greatest. LB987 allows this amount to be exceeded by a majority vote by the school board, but for no more than 2 consecutive years. Should this be the case, LB987 requires that the tax request be decreased in subsequent years to ensure a 3-year average of 3%.

Bond obligations would not be included in the property tax request limit. Additionally, potentially unforeseen obligations such as capital improvements related to fire mitigation, safety violations, physical accessibility needs; repairs related to natural disaster; and benefits mandated by the Commission of Industrial Relations (CIR) would not be included in the property tax request limit.

The provisions we support in LB987 are like those we support in LB986:

First, as I mentioned in my previous testimony, our economic landscape has changed significantly in the past year with a current 40-year high inflation rate, and this bill would accommodate that reality for districts. However, districts would still be required under Nebraska’s new Truth in Taxation law to directly notify taxpayers and justify tax increases at current levels of inflation.

Second, LB987 would also provide voters the option to approve exceeding the required property tax request. Requiring a vote of the people would give taxpayers an opportunity to say “NO” if the increases are inappropriate at that time, or to approve an override if boards have made a good case for them.

Third, LB987 has a provision to allow some degree of flexibility for districts. Should a school district choose to not increase their property tax request by the full amount allowed, they may elect to carry forward ½ the unused increased tax authority to future years. In contrast to LB986, allowing only ½ of the unused property tax authority to be carried over, combined with the bill sunsetting in 5 years lessens our concerns of a large single-year increase being imposed on taxpayers.

Thank you to Sen. Briese for introducing both LB986 and LB987.  Both bills propose solutions to address Nebraskans’ concerns about rising local property taxes.