New Iowa law provides model for Nebraska to reform local bond elections
Two school bond elections in Omaha-area schools succeeded by a 2-1 margin on May 9, authorizing more than $120 million in new debt and taxes for the school districts. The bond proceeds are committed to infrastructure and construction costs for the districts. This result wasn’t unusual for a local school bond election, and is matched by other affirmative bond elections across the state.
Turnout is understandably low for May bond elections compared to November elections. It’s easy to miss these property-tax-impacting votes in the midst of the school year winding down and families finalizing their summer plans. In contrast, November elections draw the biggest voter participation because statewide and national elections attract voters to the polls.
Iowa lawmakers acted to provide taxpayers greater transparency and accountability after they noticed the discrepancy between November and May election turnouts. Nearly a week before the Omaha-area bond elections were held, Iowa Governor Kim Reynolds signed into law HF 718, a model for Nebraska lawmakers to consider. The new Iowa law requires that all local bond elections be held on a November ballot, thereby guaranteeing high turnout and broader voter participation.
Most states provide some allowance for local bond elections to occur outside of November elections. Yet Iowa lawmakers think that is a bad idea. According to Iowans for Tax Relief Foundation, voter turnout for elections outside of November is typically less than half the traditional November turnout. As a result, Iowa local governments have racked up $14.5 billion in debt, mostly paid with local property tax dollars.
The new Iowa law will ensure more voices are heard when local debt is considered. First, the law standardizes bond election days in November:
…For any political subdivision of this state, if the special election is in whole or in part for the question of issuing bonds or other indebtedness, the first Tuesday after the first Monday in November.
In addition, the law provides voter transparency ahead of the bond election:
In addition to any other notice related to the election required by law to be published, posted, or provided…the commissioner shall not less than ten nor more than twenty days before the day of each election mail to each registered voter of the applicable jurisdiction a notice of the election that includes the full text of the public measure to be voted upon at the election.
Finally, the law requires an annual report with a list of new debt issuances from each county.
In Nebraska, school property taxes make up roughly 60% of all property taxes paid. Nebraska lawmakers are advancing LB 243 to lower property taxes in 2023. Reforming bond elections in 2024 would help slow the growth of property taxes by ensuring as many voter voices as possible are heard before a locality takes on new debt.
Nebraska’s current law requires school bond and tax elections when issuing new debt, when exceeding an allowed growth rate, or when exceeding a maximum property tax levy rate. Bond special elections can be held outside of primary and general elections dates, as occurred with the May 9th vote in the Omaha-area school districts. Lawmakers should assess voter turnout for these special bond elections and see if it would make more sense to require that bond elections be held on a November ballot.
In addition, Nebraska could consider clarifying language from Texas bond elections, too. Although the Lone Star State allows special elections in May, it requires language to be added to each bond election clarifying that the bond constitutes a tax increase. For example, consider the required language on a recent school bond election in suburban Austin:
THE ISSUANCE OF $50,820,000 OF BONDS BY THE LEANDER INDEPENDENT SCHOOL DISTRICT FOR TECHNOLOGY EQUIPMENT AND TECHNOLOGY INFRASTRUCTURE AND THE IMPOSITION OF A TAX SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS AND THE COST OF ANY CREDIT AGREEMENTS. THIS IS A PROPERTY TAX INCREASE.
Nebraska lawmakers are working to cut property taxes this year. By reforming bond elections next year, they can ensure the 2023’s property tax relief is sustained in future years through greater taxpayer transparency and engagement in the local bonding process.