Center Urges Return to Balanced Taxes in Nebraska

The Nebraska Legislature’s Revenue Committee is hearing public testimony on LB 280 and LB 357 – two legislative proposals to make major changes to Nebraska’s tax system.

For years, the Center for Rural Affairs has called for a balanced approach to funding schools and local governments. That’s why we support LB 280, because it is the only balanced tax plan before the Legislature.

Jon Bailey, Rural Policy Director

Center for Rural Affairs

LB 280 is a bill sponsored by Senator Al Davis, which proposes to reduce property taxes for school funding purposes only, expand resources for schools, reduce reliance on property taxes through a local income tax for schools, and increase state aid to schools through a method that balances the interests of all Nebraska schools.

“As Nebraskans have heard for decades, the real tax debate in this state should be how to provide meaningful and sustainable property tax reform in a state where local governmental entities are too reliant upon property taxes,” said Jon Bailey, Director of the Rural Public Policy Program at the Center for Rural Affairs. “There now seems to be a consensus among the citizens, the Legislature, and the new administration that the time has come to provide meaningful and sustainable property tax reform.”

We believe LB 280 provides the opportunity for meaningful and sustainable property reductions, particularly in rural areas, Bailey added. However, the real question, and a serious question the Revenue committee must begin to answer must be how can Nebraska enact meaningful property tax reform and also avoid harmful cuts to schools and other key services?

According to Bailey’s testimony, these questions are particularly crucial for rural Nebraska. The vast majority of our state is property rich, but people poor – an increasingly smaller number of rural residents are paying the freight for our schools and our local government. Data show that residents in areas with high amounts of agricultural land pay more in combined income and property taxes than residents of areas with the least amount of agricultural land, both on a per-capita basis and as a share of income.

“For years, the Center for Rural Affairs has called for a balanced approach to funding schools and local governments,” Bailey continued. “A third from income taxes, a third from property taxes and a third from sales taxes – the three legged stool. The current extreme reliance on property taxes for schools and local governments shows how far that three legged stool is out of balance.”

That’s why the Center supports LB 280, because it is the only balanced tax plan before the Legislature, concluded Bailey. It is the only comprehensive tax plan that recognizes that property taxes and school funding drive each other, and the only comprehensive tax plan  proposes to significantly reform that connection.

To view or download copies of Bailey’s Center for Rural Affairs testimony go to:

LB 280 [http://www.cfra.org/Testimony-LB-280]

LB 357 [http://www.cfra.org/Testimony-Opposition-LB-357]