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This article was first published by Nebraska Farmer on Feb. 10, 2023, and is excerpted here with permission.
Property tax relief has been a major policy priority for many groups in Nebraska for years. Key efforts at relief have been adopted in recent years, with expanded tax credits on property tax bills and also the refundable income tax credit for a share of property taxes paid for schools.
Further relief efforts are again a topic of deliberations in the Legislature this year, with both tax reform and school funding changes up for consideration.
Closely linked
Property taxes and school funding are closely linked because nearly 60% of property tax collections in Nebraska go toward school funding. That makes Nebraska one of the leading states in the country in terms of reliance on local tax dollars for school funding.
That ranking, however, is overstated given the degree of tax credits now offered from state funding, effectively shifting some of the burden away from local property tax dollars to state sales and income tax dollars. Current tax and school funding proposals in the Legislature could shift this further or restructure the fundamental balance between state and local funding for schools.
Reflecting on recent actions and current debate, the issue is not getting any easier — nor is it likely to disappear from public debate. Farmers and ranchers have pushed for property tax relief after watching tax bills rise substantially over the past two decades. Much of the higher tax bill came in lockstep with increases in land values that meant increased assessments given the market value approach to property valuation for tax purposes.