What you need to know about Truth in Taxation in Nebraska: Part 1
Truth in Taxation was passed by the Nebraska Legislature in 2021 and will be implemented for the first time in September 2022. This is the first blog in a two-part series. In this post I will introduce you to why Nebraska needs Truth in Taxation and what you can expect from the process. In the second post I will provide information and tips on how you can participate in the process and prepare yourself to testify at the public hearing.
Why does Nebraska need Truth in Taxation?
Nebraska’s property tax rates on homeowners are ranked 8th highest in the nation. Come election time, politicians at all levels claim that they will lower property taxes. However, there is a structural reason why this is so hard to accomplish.
In 1966, there was a successful initiative petition that banned our state government from levying property taxes. Now, all property taxes in Nebraska are levied and collected by local political subdivisions like cities, counties, educational entities, and resource districts. On my local property tax bill, I have ten political subdivisions that collect a tax off of my property. Each of these entities are responsible for our total property tax bill. Currently, the state attempts to impact property taxes by returning money to taxpayers through tax credits or programs that offset the need for funding by these local political subdivisions, but it does not levy any of these taxes.
Nebraska’s fragmented property tax system makes it easy to pass on the blame for our high tax burden. Our system also makes it very difficult for voters to have a say when there are so many elected boards and councils who are deciding our property tax fate. Add the commonly used political tactic of collecting the windfall of additional tax dollars gained when property valuations increase—while claiming that taxes weren’t raised because the levy rate wasn’t increased—and it is no wonder taxpayers feel powerless when it comes to holding the line on property taxes.
In the 2021 legislative session, LB644 was passed to add transparency and accountability to Nebraska’s property tax process. LB644 is officially titled the Property Tax Request Act, but the policy behind it is commonly referred to as Truth in Taxation. Truth in Taxation requires that any county, city, school board, or community college that would like to receive an increase in dollars that exceeds 2% plus real growth must hold a public hearing to make the case to their taxpayers and voters. They are required to notify taxpayers with a postcard mailed directly to the property owners.
The big win for voters is that this simplifies the process of being an informed taxpayer and participating in the process of setting most of your property taxes. The four political subdivisions will hold a joint public hearing, and the law requires that anyone who wants to testify be granted time to do so. This will be the only business that will be conducted at this hearing. The hearings are required to be held after 6 PM to make it easier for people to attend.
How do the joint public hearings work in Nebraska?
LB644 spells out very clearly the process for determining when a county, school board, city, or community college is required to participate in a Truth in Taxation joint public hearing and what that process looks like.
First, the political subdivision sets its operating budget for the coming year and the county property assessor sets property valuations. If the total tax dollars required to fund the proposed operating budget is more than 2% plus the real growth rate (growth from new construction or annexation, for example) higher than it was last year, given the current property valuations, it is required that the political subdivision participate in a public Truth in Taxation hearing.
Next, the political subdivision(s) notify the county clerk of the intention to participate in the public Truth in Taxation hearing. Hearings must be held after 6 PM between September 17 and September 28. Postcards notifying taxpayers of the proposed increase and the date and time of the hearing must be mailed out at least 7 days prior to the scheduled hearing. The postcards are mailed out by the county assessor’s office. All counties with populations greater than 25,000 will be required to post the notice of the hearing on the home page of the county website.
If a political subdivision spans more than one county, they are required to hold only one Truth in Taxation hearing in the county of their main office or headquarters. For example, community colleges are only required to hold their public hearing in the county where the main campus is located.
Truth in Taxation Postcards
The postcards and the joint public hearings are required to provide a lot of information for the taxpayers. In addition to information about the property and its owner(s) the postcards must include:
- The words “NOTICE OF PROPOSED TAX INCREASE”
- The name of the county where the hearing will take place and the name of the political subdivision
- Time, date, and location of the hearing
- Estimates of the tax on your property as a result of the revenue increase (the actual tax on your property may increase or decrease)
- Last year’s and this year’s assessed value of the property and the corresponding property taxes paid and due for each participating political subdivision
- The change in the amount of property taxes due from the previous year to the current tax year
- Contact information for the political subdivision(s) holding the hearing.
Truth in Taxation Public Hearings
At the public hearing, each political subdivision will give a brief presentation on the intent to increase its property tax request by more than the allowable growth percentage and the effect of such a request on the political subdivision’s budget. The presentation will include:
- The name of the political subdivision
- The amount of the property tax request
- Required language that specifies how much the total assessed value of property has changed from last year, the tax rate that would levy the same amount of property tax as last year, the proposed tax rate, and the percent of increase the proposed total operating budget would be over last year’s operating budget
- Contact information for the political subdivision
- The public hearing will also allow time for any member of the public to speak for a reasonable amount of time.
Now that we have discussed why we need Truth in Taxation in Nebraska and what the notification and hearing process looks like, we need to discuss how you, the taxpayer, can participate in the hearing. The second blog in this series will cover the basics of preparing your testimony for the Truth in Taxation hearings. Head over to PlatteInstitute.org/Truth to see all of our resources and to sign up to receive Truth in Taxation alerts, including the next post in this series.
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