LB 280 — A comprehensive approach to our property tax and K-12 funding challenges
A Revenue Committee hearing on LB 280, a bill to address Nebraska’s property tax challenges while also protecting K-12 funding, will be held today at 1:30 p.m. in the State Capitol, Room 1524.
Property taxes have risen statewide in recent years, increasing by 38 percent in our state’s urban areas and by 85 percent in rural areas over the last decade.
A long history of high property tax reliance to fund schools
Every major study of Nebraska taxes since 1962 – including the 2013 Tax Modernization Committee study – noted our state’s high reliance on property taxes to fund schools. Presently, about 48 percent of Nebraska K-12 funding comes from property taxes, compared to a national average of 29 percent.
That reliance is largely a result of historically low state support for our schools. When we enacted our current school funding system in the 1990s, we ranked 49th in state support as a share of K-12 funding. More than 20 years later, we still rank 49th.
In FY13, we hit a historic low in state support for K-12 education as a share of the economy since the implementation of TEEOSA. While we bounced back slightly, the projections in the Governor’s budget would take us back to that historically low level.
Other proposals have unintended consequences, income tax cuts would exacerbate property tax challenges
Many of the proposed policies that attempt to reduce our heavy reliance on property taxes, while well-intentioned, have unintended consequences that ultimately reduce our ability to invest in the education of our children.
Moreover, proposed reductions to income taxes will reduce available revenue streams that support our state investment in education, further exacerbating the reliance on property taxes to fund schools.
We need to find a way forward that protects our investment in K-12 education and affords all students equal educational opportunities.
New ideas needed to address property taxes and school funding
If we want meaningful, sustainable property tax reform, we’ll likely have to consider outside-the-box ideas like LB 280.
We recognize that the proposal is big departure from how we currently fund schools, and that it takes a while to fully grasp it, so we encourage people to step back and think about how we would determine a community’s ability to fund their public schools if we were building a formula from scratch.
Should property wealth be the primary determinant of a community’s ability to support their schools? Or should income wealth also be taken into consideration? When framed that way, we believe that most people would agree that income should be part of the resource calculation.
Nebraska’s property tax imbalance must be addressed for the good of the state and its residents. But it’s also vital to make sure our schools are adequately funded. LB 280 accomplishes both.
NET Nebraska will stream today’s hearings on the bills starting at 1:30 p.m. and OpenSky will provide updates on our Twitter page.