Local Officials Respond to Tax Relief Plan

By Gordon Hopkins Governor Pillen signed LB34e, the property tax relief plan, at a ceremony on Tuesday, August 20, 2024. One element of that plan, a cap on the ability of local municipalities to raise tax revenue has caused consternation among some municipalities.The governor estimates the plan will result in a 20 percent tax savings. That falls short of Pillen's intended 40 percent cut in property taxes, but the governor vowed to continue to work towards that goal.“LB 34 is an important step forward,” said the governor. “This is not a one-and-done issue. It’s the top concern that Nebraskans talk to me about wherever I go, and it needs to be addressed so we are no longer chasing seniors out of their homes and killing the dream of home ownership for young people.”One of the most controversial elements of the plan is the cap. Originally, the cap was set at zero percent of Consumer Price Index (CPI). CPI was later replaced with an alternative government index.Senator Tom Brandt (R-District 32), who voted for LB34e, explained the cap in a recent editorial, “Additionally, we established a hard cap on property tax levying by cities and counties. This cap is set at the rate of inflation or 0 percent, whichever is higher, with exceptions made for first responders such as law enforcement, firefighters, and EMS. These measures aim to bring more predictability and control to property tax increases, ensuring that local governments can still meet their needs without placing an undue burden on taxpayers.”However, the cap has left local governments uncertain how to continue providing essential services for citizens in the light of inflation and demand for higher wages. FJN reached out to local officials for their reaction to the plan. Jefferson CountyJefferson County Commissioner Mark Schoenrock told FJN, “As a county board, we will continue to provide top quality services to our citizens, and we will be responsible stewards of the taxpayers money, which is the revenue that provides for the essential services for our citizens. And we will continue to work with Governor Pillen and work with the legislature to be partners in serving the citizens of Nebraska. The effect LB34 will be that, it'll make that a little more challenging, but we will do our best to continue to provide those essential services to our citizens. One of the things that we will now have to deal with is, with that cap, it could have the effect of reducing local control over our budgets, as there could be changes in the local needs of each county.”Outgoing County Commissioner Gale Pohlmann said, “This bill did not favor the counties. As I said at the meeting, the school districts have the biggest local property tax footprint, but the counties and cities appear to have taken the brunt of this bill. The government index, while better than the CPI, has been negative a couple of times in the past. We have too many variables that can go wrong in a year, that the hard cap will be a struggle to manage. We will have to budget more savings to get through any bad times which may happen in the future, which means a tax increase to maintain a cash reserve!”“The only good thing is that the School Tax Credit will be up front and deducted directly from our tax bills before they are sent out in December. This will definitely be a deduction we will better see for our tax bills,” Pohlmann added. “In visiting with Senator Brandt since the session, there will be some things fixed in January. Also he, along with several other senators, will be going back to revisit the sales tax exemptions and raising the sales tax rate. Hopefully the new senators will have a better attitude about doing something that needs to be done!”Incoming Jefferson County Commissioner Danielle Schwab will have to deal with the fallout from the caps, “I have concerns about the potential impact of LB 34 on infrastructure and the need for government employees, particularly given the existing budget constraints caused by rising inflation. Although grant funding is sometimes suggested as a solution, many grants require a 20 percent match, which is difficult in an already tight budget. For true tax relief, cuts and caps should apply across all taxing bodies.” Gage CountyGage County Supervisor Don Schuller said, “I do know the 0 percent cap on counties, cities and villages will make budgeting difficult. I am concerned how it will all shake out. I appreciate the effort the governor has made in reducing property taxes. But I do not agree with the direction he took for the most part.”Gage County Supervisor Emily Haxby said, “While I appreciate efforts to fix property taxes, counties are a very small part of the equation. Most counties are fiscally responsible and try to request for necessities. If you look at a tax statement, usually 60 percent or more go to schools while about 15 percent goes to counties. If looking at a property tax solution, perhaps it would be best to look at how schools are funded. Property taxes go towards fire departments, ag societies, cities, counties, townships, and schools. When looking at a piece of farm ground, that specific piece of ground would use the roads and if there is a fire, it would need those services, but while no home is on the property, it would not need a school, yet that ground pays a significant amount towards that. While I appreciate Senator Dorn's and Senator Brandt's (and others) efforts to get amendments on the bill that would put a bottom on the % cap, I believe that the legislature was reaching for what they could call a small win as to show that their session was not a complete failure.”

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