The Legislature continues to weigh proposals as part of the Governor’s plan to reduce property taxes collected by political subdivisions. A key component of this proposal may be some form of cap on how local political subdivisions – namely cities, counties and school districts – can grow their property tax revenues. The rationale put forward by proponents of revenue caps has often been that they are needed as a mechanism to limit spending by local governments. 

Senator Jana Hughes (LD 24) provided an update during a Wednesday afternoon webinar featuring insight from panelists on how localities in Texas are managing limits on how they budget, and how schools in Nebraska are navigating caps put in place just last year.

Dick Lavine, a senior fiscal analyst for Every Texan, outlined how the rapidly growing city of Austin, Texas, is dealing with a 3.5% annual limit on increases in property tax revenue.

Lavine said the city has fared OK while federal ARPA dollars flowed in to city coffers and local sales tax revenues grew, but that it will be hard to keep up going forward when the cost to maintain existing services is growing by 3.5% or more a year.

“You’re going to have to find either other sources of revenue, fees or something else, or run a deficit, or start cutting back on services that the city provides to those of us who live here,” Lavine said. “They’re getting squeezed. It’s the inevitable result of a hard cap like that.” 

Jen Hiebner, a member of the Board of Education for Heartland Community Schools in Henderson, shared details of how the revenue cap placed on Nebraska school districts last year disrupted an ongoing building project.

Heartland had budgeted for these school improvements, Hiebner said, but school district leaders couldn’t fit the added cost into a budget constrained by revenue caps. Instead, they’ll pursue a bond issue vote this spring. 

“We’re trying to make improvements to our school,” Hiebner said. “We’re constantly in that battle of keeping teachers and staying fully staffed.

“We’re doing what we can to work within the parameters that we’re given, and just try to continue to educate our communities and keep them invested.”

The webinar also debuted a new tool at OpenSky’s website to review financial information, demographics and achievement data for all 244 of Nebraska’s school districts. Watch for more information to come on OpenSky’s School District Profiles.