Big week of tax and school finance debate starts this morning

Tax and school finance discussions will dominate the Legislative agenda this week starting with this morning’s discussion of LB 640, a measure that would direct new state aid to school districts that rely on property taxes for more than 55 percent of their general fund revenue.

The aid would be paid for by the Property Tax Credit Program, and school districts would need to offset their property tax requests with aid received from this program. LB 640 also affects other aspects of school funding by lowering the maximum property tax rate school districts can levy and adjusting reimbursement for students who option into different districts. Property taxpayers in many of the school districts that are highly reliant on property taxes and receive this new aid would see tax reductions. Taxpayers in other school districts that don’t receive enough or any of the new aid — including most larger, more populous school districts and some more rural districts — would see property tax increases relative to what they receive under the existing Property Tax Credit Program.

The school finance discussions will continue on Wednesday morning when the Legislature begins debate on LB 409. The bill is the mechanism lawmakers propose to use to achieve the 2.1 percent growth in state K-12 funding called for in the state budget proposal. LB 409 will not result in a uniform 2.1 percent increase for all school districts. Some districts will see more funding growth than that and others will see less. In fact, 20 districts would see outright cuts in state school funding in FY18 compared to what they received in FY17. Districts that are already taxing at their maximum property tax level would not be able to raise more revenue to make up for their reduced state support without a vote of the people.

Tax debate continues Friday morning when lawmakers begin debate on LB 461, a tax package put forth by the Revenue Committee. Read our full analysis of LB 461. The fiscal discussion continues next week as lawmakers are expected to begin floor debate on the state biennial budget.

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