Make Nebraska property taxes honest with Truth in Taxation
It’s often said that Americans would vote differently if Election Day happened right after we filed our income taxes.
At the Platte Institute, we do believe knowledge is power, and that Nebraska voters and taxpayers don’t get enough information from their leaders about how the government really works.
While Election Day might not be changing to April anytime soon, the month of September will become synonymous with local property taxes in Nebraska. And what happens in September could certainly leave an impression with voters.
That’s because every year in September, Nebraska’s Truth in Taxation law requires cities, counties, school districts, and community college districts to directly notify taxpayers about proposed property tax increases, and hold public hearings where taxpayers can express their views about property taxes in their community.
Today on Nebraskanomics, I’m going to share:
1. Why Nebraska created a Truth in Taxation law.
2. What the Truth in Taxation process will involve every September.
3. And how Nebraskans can use Truth in Taxation to keep property taxes in check.
And stay tuned until the end when I’ll share how you can receive free Truth in Taxation resources, which will help you stand up for taxpayers in your area.
Why Nebraska created Truth in Taxation
A lot of times, the property tax problem is laid at the feet of the Nebraska Legislature. And while there is a role for the state government in setting the laws that limit property taxes, it’s still important to remember that property taxes are only levied at the local level in Nebraska. Meaning, the people who actually decide how much you will pay in property tax on a regular basis are local officials: your school board, city council, county board, and many more.
Even with the Legislature spending about $1 billion on property tax relief programs—with more to come—taxpayers remain confused and unhappy. They’re experiencing grief more than relief, because sharply rising home and property values are being used to collect a windfall from taxpayers.
Around the time of the COVID-19 pandemic, even with the emergency footing the state was on, Nebraskans remained seriously concerned about the economic impact of property taxes on their households and businesses.
And state lawmakers started figuring out that local tax increases were part of the reason the historic amount of money they were spending on tax relief wasn’t being noticed. There needed to be a way to apply an appropriate amount of public pressure on local officials so they would think twice about enacting property tax increases that voters would consider inappropriate or excessive.
Traditionally, local elected officials—including me when I served on my city council, by the way—have defended our fiscal stewardship by talking about how we didn’t increase property tax rates, often informally called a levy in Nebraska.
The idea is that because officials didn’t raise property tax rates, they didn’t raise your property taxes. Of course, that’s not true in either an economic or policy sense. When home or property values rise, and tax rates don’t fall by a corresponding amount, a tax increase occurs for a taxpayer. If, for example, a 10% increase in home or property values occurs in an area, locally-elected boards are the ones who decide whether to tax all of that 10% by keeping rates the same, to propose a more modest increase by reducing tax rates by some amount, or even keeping their revenue levels the same as the previous year, by making a corresponding reduction in tax rates.
For the most part, taxpayers were being cut out of this process. Yes, technically, local political subdivisions had to put notices of their meetings in a newspaper of record, but few people were truly made aware with this method.
Instead, most taxpayers concerned about their property taxes were busy focusing on contesting their property valuations, which is sometimes the right thing to do. But it’s a process a taxpayer goes through alone, and it doesn’t solve the underlying problem of high property taxes.
The reality is that property values have been increasing significantly in Nebraska and all across the country, in part, due to an unhealthy real estate market where too little housing is being built to meet people’s needs.
And because Nebraska already has the country’s 8th highest property tax rates, these valuation increases hit Nebraskans harder than people in most other states. Add recent woes with inflation to the list, and it should be obvious why it’s wrong to make taxpayers pay even more almost automatically.
Now, in theory, Nebraska taxpayers could have gotten organized and held their officials accountable on their own. But polling showed that while most Nebraskans were stressed out about their property taxes, and wanted more done to bring them under control, most were also unaware of the role they could play at local property tax hearings, or even that local governments held hearings where property tax decisions are voted on in the first place.
The philosophy of Nebraska’s Truth in Taxation law is simply that property taxes should be transparent and easy to understand, and that local governments should have to justify property tax increases to fully-informed taxpayers and voters every year.
So, Truth in Taxation does not cut property taxes, and doesn’t even say Nebraska communities can’t pay higher property taxes if they really want to. It simply creates a process by which everyone who pays property taxes is made aware of what’s going on, and is given the tools to speak out about a tax increase if they believe it goes too far.
What the Truth in Taxation Process Involves Every September
As its name implies, Truth in Taxation fills an honesty gap between local political leaders, who often say they didn’t raise your property taxes, and the economic reality that property taxes are increasing, often to an unaffordable level for Nebraskans.
Instead of receiving every penny of increased property values automatically by adopting a new annual budget, local governments have to justify to taxpayers—in a fully-informed and transparent annual process—why they need additional revenue.
Currently, Nebraska’s Truth in Taxation law has a growth threshold. If a political subdivision wants up to a 2% property tax increase, plus growth from new construction, then the Truth in Taxation notification and hearing process does not apply. This was a compromise with political subdivisions in Nebraska. In other states that have this law, like Utah and Kansas, political subdivisions must always provide postcard notices and conduct Truth in Taxation hearings, even if they want one penny more in revenue.
If there is no Truth in Taxation hearing, you can still attend your local hearings for taxing subdivisions, by the way. But under state law, these boards seeking a smaller increase will only have to vote on their budget and tax rate at their regular meetings.
But if a city, county, school district, or community college district wants a property tax increase greater than 2% plus new construction, then they must inform county clerks in their jurisdiction in early September of their intention to participate in a special Truth in Taxation hearing.
In the first half of September, the county where you live or own property will mail you a Truth in Taxation postcard that will notify you of the proposed tax increases subject to Truth in Taxation on your bill. It will also contain information about the Truth in Taxation public hearing, which will occur in that county after 6 p.m. on a date between September 17 and September 28.
If you’d like to share this information with others electronically, there should also be a posting about the Truth in Taxation hearing on your county website. Later on in this episode, I’m going to show you how you can find that information if you don’t have it already.
Now, to simplify the public hearing process, there is only one Truth in Taxation hearing per county. Each subdivision seeking an increase in that county must send at least one representative to speak at the hearing.
Each elected board representative will give a presentation containing the following information:
- The name of their political subdivision
- The amount of property tax revenue they are requesting
- How much the total assessed value of property differs from last year
- What the property tax rate would be if the subdivision didn’t take any new property tax revenue at all
- The tax rate the subdivision is requesting
- And the proposed percentage by which that subdivision’s total budget would increase over the previous year
The representative of the subdivision will also provide phone and email contact information for the political subdivision they represent.
Then, it becomes the public’s turn to participate in the Truth in Taxation hearing. This may be the most important part of the process. If you don’t use the information provided under the Truth in Taxation law to attend these public hearings, speak to your elected officials, and connect with other taxpayers, then political subdivisions would be well within their rights to assume Nebraskans aren’t really concerned about their property tax policy decisions.
In Utah, where Truth in Taxation has been the law since the 1980s, hearings are often well-attended. Because of that, some years, boards simply opt not to raise property taxes. They might not want to face the scrutiny of taxpayers, or they may plan to wait until they can make a better case for why the public should pay more.
According to the Tax Foundation, Utah property tax rates for homeowners are among the 10 lowest in the country. A separate study found that local government finances weren’t hurt by the process, though. Most subdivisions had revenues that were keeping pace or exceeding population growth and inflation, which is notable, since Utah’s population has more than doubled since the Eighties.
And while Nebraska’s law is not a perfect copy of Utah’s, it shares the similarity that anybody can speak at the Truth in Taxation hearing. There’s also no limit on how many people can speak at the hearing.
I do want to mention here that Nebraskans are asking our team what safeguards are in place to ensure that political subdivisions actually follow the law and participate in the Truth in Taxation hearing if their proposed property tax increase exceeds the allowed threshold.
It is important, especially as this law gets its start in Nebraska, that members of the public and elected board members pay careful attention to following through with Truth in Taxation requirements. Deliberately ignoring the Truth in Taxation notification and hearing process makes a political subdivision’s property tax request invalid under state law.
Stranger things have happened at the local level in Nebraska, so if any boards do ignore the hearing requirement, those of us who value Truth in Taxation will have to hold them accountable in accordance with state law to assure they don’t receive taxpayer money they weren’t willing to make the case for.
How Nebraskans Can Use Truth in Taxation to Keep Property Taxes in Check
Elected officials in Nebraska rarely hear from taxpayers when it really matters. Truth in Taxation is your opportunity to express your views about what the property tax rate in your community should be before it’s too late.
Think of it like voting. If you don’t attend the Truth in Taxation hearing to express your views before boards set their property tax rate, then there’s little use in complaining after it’s already decided.
So, let’s talk about giving public comment at these hearings. What I’m about to share with you is something you can use in other places too, like the Nebraska Legislature, or any meeting where you can to share your views with decision makers.
The first time you testify at a public meeting is always the hardest, because you’re usually surrounded by people who are accustomed to the process and are often looking to get out of the meeting as soon as they can. So, you’ve got to catch up. But once you do, you’ll see that giving testimony can be an easy, speedy process.
Sometimes, there will be a list you will have to sign in on, or a form you need to fill out, in order to make clear that you want time on the agenda to speak. At other meetings, officials will open the hearing to public comment, and the microphone may be open on a first-come-first-served basis.
It’s generally good practice to seat yourself close to the part of the room where public comment will be delivered, not only to save time for everyone in the hearing, but to make sure you don’t miss your opportunity to participate before officials close the public comment section of the hearing.
There’s a lot to be said about an issue like property taxes, but it’s best if you prepare a brief testimony in advance and practice delivering your remarks.
State law says you will get a reasonable amount of time to provide comment at the Truth in Taxation hearing, but the chair of the hearing usually has discretion to limit that time based on how many people are expected to testify. You should consider how you would share your views if you are given as little as one minute, although you typically will have somewhere between three to five minutes.
Remember, if you have more to say than time allows, there’s nothing wrong with sending an email to your elected officials elaborating on your concerns from your Truth in Taxation testimony.
Here are a few tips for preparing your Truth in Taxation testimony:
- Make sure to clearly state from the beginning of your testimony if you support or oppose the proposed property tax increase.
- Share your story. Focus on how the property tax increase will impact you and your financial, family, or business situation. Or, if you think the board is proposing a good decision about property taxes, explain what priorities you value in the proposal.
- Keep your testimony straightforward and simple by focusing on the facts and your own experience or expertise. It’s not a political manifesto, it’s just your opinion of what the property tax rate should be next year.
And it’s OK to share your opinion without a lot of commentary. If you testify at a later point in the hearing, it’s very likely other members of the public will have said similar things to what you were going to say. It’s perfectly fine to state your position, say you share the concerns of previous testifiers, and thank the chair for the time to share your view. Just standing up and being counted is an important part of this process, and how officials decide if a property tax increase is a worthwhile decision.
Now, it’s important to know that the Truth in Taxation hearing is not where your city, county, school district, or community college will decide on the final tax rate. After the subdivision complies with the notification and hearing requirement, they have to take an on-record vote on their tax levy at their own public hearings.
This is another opportunity for you as a taxpayer to share what happened in the Truth in Taxation hearing and how that should inform the action board members should take. You can spread the word through social media, with your local news outlets, and with area community groups in advance of local boards voting.
But if you have more than an average interest in doing something about property taxes, I want to give you another piece of advice about how to get involved with Truth in Taxation in the long-term.
As I said at the outset, the people who ultimately decide whether the Truth in Taxation hearing is impactful on policy are elected officials. And there’s no better way to influence whether your city, county, school district, or community college will adhere to Truth in Taxation than running for office and getting elected to serve on one of those boards.
Truth in Taxation is highly popular with voters. Before Nebraska’s law was created, 77% of Nebraskans said they wanted a law on the books that would inform them by mail before boards held a hearing to raise property taxes.
In today’s divided political environment, that’s an overwhelming level of agreement. So, no matter what political party you belong to, Truth in Taxation is a big opportunity for rising leaders who want to represent taxpayers and give them a tangible way to get involved in the community.
But this process is not just good for taxpayers. It also forces local taxing subdivisions to more thoughtfully engage their constituents when they’re making big policy decisions. And as someone who has a local government background, I don’t personally make the assumption that taxpayers are always going to be unhappy when they hear about what the local government is doing with their money.
The goal of Truth in Taxation is that property taxes are levied with transparency and accountability. But the product of that process can also be a community where there is more balance and understanding between those who levy the taxes, and those who pay them.
A lot is said in Nebraska about local control in policymaking, but ultimately, that control is only valuable if it’s vested in local residents and taxpayers. When taxpayers are better informed and engaged, we can reduce confusion and uncertainty, and get closer to local policies that truly represent the concerns of the vast majority of residents.
High property taxes have created grief for Nebraskans for decades, but with Truth in Taxation now occurring every September, taxpayers will never be blindsided or left out of the decision-making process again.
Today, we discussed:
- Why Nebraska created a Truth in Taxation law,
- What the Truth in Taxation process will involve every September, and
- How Nebraskans can use Truth in Taxation to keep property taxes in check.
And as promised, our team at the Platte Institute has created a free set of Truth in Taxation resources to help you prepare for engaging with elected officials in your area. Just visit PlatteInstitute.org/Truth to get our Truth in Taxation Alerts, which will include everything from tips on testifying, interviews with experts on the Truth in Taxation process, and easy-to-share content that you can use to help get more Nebraska taxpayers informed and involved.
Don’t hesitate to reach out to our team if we can help you with a property tax issue in your area.
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