LB 890, a proposal being debated by lawmakers, shows promise as a way to address Nebraska’s long-standing overreliance on property taxes because it gets to the heart of the issue – low state support for K-12 education.

Nebraska currently ranks 49th nationally in the percentage of K-12 funding that comes from the state, which has left schools heavily reliant on property taxes. This high reliance on property taxes led the 2013 Tax Modernization Committee to recommend increasing state support to schools as the best way to ease property taxes in Nebraska.

LB 890 – in conjunction with LB 891, which is before the Revenue Committee – would increase state K-12 aid in a way that ensures all schools get more dollars. This would allow schools to reduce property tax levies while also preventing funding cuts that harm educational opportunities for students.

OpenSky analysis shows LB 890 – as amended by AM 1756 – could provide more property tax relief than many taxpayers receive under the state’s current LB 1107 refundable income tax credit, which would be dissolved to provide more school aid under LB 890.

For example, someone who owns a median-valued home in Norfolk pays $1,570 in property taxes and receives $397 back through the LB 1107 credit. Under LB 890 as amended, this taxpayer would receive an additional $233 in property tax savings over what they currently receive under the LB 1107 credit.

In York, a homeowner with a median valued home pays $1,447.05 in property taxes and receives $366 back through the 1107 credit. Under LB 890 as amended, this taxpayer would receive an additional $146 in property tax relief on top of what they do under the current LB 1107.

Because it addresses Nebraska’s low state support for K-12, LB 890 presents a better option for providing property tax relief than what is proposed in LB 723, a measure on the second-round of debate that would – under FA65 – prevent the funding level for the LB 1107 credit from dropping below $561 million per year once fully implemented.

As is the case with LB 723, however, neither LB 890 nor LB 891 creates new revenue streams to offset their fiscal impact. In this way, all three measures create sustainability concerns as they could force cuts to schools, health care and other services should state revenues lag in the future.

Nebraska Public Media will stream all legislative debate and hearings live.