Senators hear proposal for “Truth in Taxation” law

Yesterday, the Legislature’s Revenue Committee held hearings for LB1212 and LB1213, which are both tax reform bills introduced by Sen. Ben Hansen.

You can see our testimonies on those bills here.

Both bills contain a provision that would make updates to Nebraska’s current property tax hearing requirements.

Under the proposal, Nebraska would adopt an approach to notifying property taxpayers known as “Truth in Taxation.” Counties would be responsible for mailing notices to property owners when local political subdivisions plan to hold hearings that will decide whether property taxes increase.

This policy has been in use for decades in Utah and was the subject of a column by Laura Ebke.

In Utah, the Truth in Taxation law is famous, if not infamous, for drawing taxpayers out to hearings that decide their property taxes.

Board members in Nebraska often observe that Nebraskans say they care a lot about property taxes, but then don’t show up to board meetings. To be fair, some board meetings currently happen while most Nebraskans are at work. That would be one thing a Truth in Taxation law would change.

Introducers of Utah’s Truth in Taxation law say it makes local political subdivisions think carefully before adopting property tax increases, and the reasonable property tax burden in the state gives good evidence the law is working as intended.

Here’s an example of an electronic Truth in Taxation hearing notice from Sandy, Utah. As you can see, local political subdivisions have to make their case to taxpayers about why a property tax increase may be necessary.

Nebraska took a small step toward creating a Truth in Taxation law last year when it adopted LB103, which created a hearing process that would require boards to have a separate hearing to decide on property tax increases that arise from higher valuations.

If the boards didn’t hold this hearing, then tax levies would automatically decline as valuations rise, preventing a tax increase for taxpayers whose property value rose at the average rate.

Boards held LB103 hearings in 2019, but it appears Nebraskans could still use more information about when the hearings are being held and how their local officials’ decisions would impact their property tax bill.

Currently, newspapers are the main way taxpayers would find out about a local board hearing if they were looking for that information in the first place.

Truth in Taxation outlines the real cost of what boards are voting on and informs taxpayers in a way they are sure to notice—by mail and online.

Our view is that Nebraskans are willing to give their political subdivisions leeway when there is a good argument for paying property taxes, but that too many taxpayers feel cut out of the decision-making process right now.

By inviting more Nebraskans to participate in the process, local tax and spending decisions may strike a better balance.