Farmland valuation drop for bond issues wins first-round approval
Proponents of property tax reform scored a small victory Thursday, advancing a bill that would lower agricultural land values for the purposes of paying for school bond issues.
As it stands now, the bill (LB183) from Sen. Tom Briese of Albion would reduce the assessed valuation for farmers and ranchers from 75 percent of market value to 50 percent of market value for the purposes of paying for voter-approved school construction or facility improvements.
Briese’s plan, reflecting a significantly smaller reduction in ag land values than he originally sought, advanced from the first round of consideration with 29 votes. Only Omaha Sen. Ernie Chambers voted against the bill Thursday.
While LB183 started out as something of a test balloon for a coming property tax relief fight when it was first debated Feb. 12, Briese said the vote signaled to Nebraskans meaningful property tax relief is achievable this year.
“The message it sends is that this body recognizes the plight of agriculture and recognizes that changes like this can lead to long-term, structural reform of education funding in Nebraska,” Briese said after the vote was taken.
As introduced, LB183 would have slashed ag land valuations from 75 percent to 1 percent to pay for school construction or improvements, leaving homes and businesses valued at 100 percent of market value.
The Revenue Committee amended the bill to set ag land value at 30 percent, which a contingent of urban senators said was still out-of-balance and led the Legislature to come to a standoff in mid-February.
Briese continued working with senators while the bill was on hold and, two weeks later, offered to set the level of ag land valuation at 50 percent, which ended the earlier opposition from some urban senators.
“Fifty percent is a point at which several education groups indicated to me they wouldn’t oppose it,” he said during debate Thursday. “Not saying they are in favor of it; they wouldn’t oppose it.”
Still, the Legislature considered the bill for a little longer than an hour, with other rural senators saying they supported the plan that would shift the property tax burden to communities where the majority of a school district’s voters live.
Sen. Curt Friesen of Henderson said ag land owners have often had their objections to school bond issues ignored at the ballot box by communities that bear little cost in paying for the school improvements.
Shifting the burden of paying for those bonds to home and commercial property owners would result in a “negligible” tax increase, Friesen added, while providing needed relief to farmers and ranchers, where the added taxes can mean “the difference between a profit and a loss.”
Friesen, as well as Sen. Steve Erdman of Bayard, said rural schools often use bond issues to breathe life into their facilities when they should be looking at consolidating with neighboring districts.
Sen. Bruce Bostelman of Brainard pointed out Briese’s bill would help farmers who own land in a school district where they don’t live and can’t vote, and Sen. Dan Hughes of Venango said LB183 would address inequalities in representation when it comes to school bond votes.
“When the majority of the voters in the district live in town, they can vote it in full well knowing they don’t have to pay a majority of the price,” Hughes said. “That’s the unfairness.”
Lincoln Sen. Kate Bolz once again pitched her bill (LB182) allowing voters to pay for school bond issues through an income surtax of district voters as an alternative plan to Briese’s, calling it a progressive tax plan that would assess improvements by a person’s ability to pay.
LB182 was heard in the Revenue Committee on Feb. 13, but no action has been taken on it.
Chambers, the lone vote against LB183, said he would oppose helping farmers and ranchers “left behind” by recent economic downturns because senators representing those districts have refused to help the poor, racial minorities, LGBT and others “left behind” elsewhere.
He also said rural Nebraska’s support for President Donald Trump and his trade policies has resulted in plummeting commodity prices, exacerbating the property tax issue.