Property Tax Levies Matter, Too
Late May and early June are the days when property tax valuation change notices land in mailboxes across the state, which can signal an impending tax increase for many.
The first thing you should know is that there still is time to protest your valuation if you believe it is inaccurate. You can file the protest in person or by mail with your county clerk on or before June 30. Their contact information can be found online at: http://www.revenue.nebraska.gov/PAD/counties/counties.html
Many Nebraskans who take their taxes seriously stop at this point. Some win and some lose. But the consternation begins anew with the next potential increase in property values.
Farm land prices have kept the focus on property tax valuations in recent years, but in Nebraska, not enough attention is given to tax levies, which are the actual tax rates you pay. U.S. Census Bureau data show that the average effective property tax rate on owner-occupied housing in Nebraska is 1.84 percent, which is the 7th highest in the country.
When valuations increase and levies remain the same, a surge of additional tax dollars make their way to local political subdivisions. This may be acceptable when new taxpayers are growing the tax base, but if an existing group of taxpayers are being used for a windfall, not balancing the increase with a levy reduction can feel confiscatory.
Levies can be reduced by local subdivisions in their annual budgeting process, which takes place in the fall. That means taxpayers do have a last resort to controlling the growth of property taxes.
Though the devil is in the details, property tax levies vary more widely across Nebraska than people realize, and reductions do sometimes happen. In 2015, valuations in Adams County increased 15 percent. Appropriately, the area school board reduced tax levies by nearly that much.
Buffalo County also experienced a major shock in valuation season last year. Even many residential taxpayers saw double-digit percentage increases, leading to over 1,700 protests. Local governments committed early on to lowering levies — and they did —but it’s arguable whether they did so by enough.
While overall valuations increased by about 13-15 percent, Kearney’s school district and city levies were only decreased by 5-7 percent, hitting many with a substantial tax increase.
School boards receiving state equalization aid would push back at the argument that valuation increases should be met with levy reductions, since state aid often goes down when the local property tax base grows, potentially cutting their budget if they lower rates.
LB959, passed in the 2016 session, removes the minimum levy requirement (0.95 percent of property value) for school districts to receive equalization aid, and may mitigate some of the incentive to keep levies higher in certain districts.
But as much as your school district likely makes up the largest share of your local property taxes, a big chunk of it is still going to other entities. Numerous local subdivisions are represented on your property tax bill, including your city, county, Natural Resource District, Educational Service Unit, community colleges, airports, fire districts, and more.
Navigating these bodies and their processes can be a challenge. Some meet while most taxpayers are at work. Others hold session when Nebraskans are commuting or enjoying family time, making attendance a personal sacrifice.
In December 2015, the Douglas County Board voted 4-3 to increase board member salaries by a total of 34 percent. This misuse of taxpayer funds became front page news and a campaign issue. But in a county of over 500,000 residents, only two people showed up to oppose the increase.
I was one of them.
Many people are understandably upset about valuations, but no local assessor can change the market prices of property. The decision of where to place tax levies provides a concrete, consistent tool for limiting property taxes by local preference. It’s up to Nebraska’s taxpayers to decide how important it is for them to have control over this aspect of their tax burden.
If you truly dislike paying the property tax more than you enjoy complaining about it, it might be time to get to know your fellow taxpayers and attend a local meeting where your tax levy rates are on the agenda.