Murman says bill would cut property taxes 5%

McCOOK, Neb. – Property taxes levied by community colleges would go away and the State of Nebraska would assume responsibility for that funding under LB783, a bill introduced by District 38 Senator Dave Murman. LB783 would lower property taxes by about 5%, Sen. Murman told constituents on a brief legislative update call hosted by the McCook Chamber of Commerce Thursday morning.

The bill provides that beginning in 2027, the state would distribute funds to community colleges to offset their lost property tax revenue. The funding automatically increases by 3.5 percent each year after 2027.

Sen. Murman introduced LB783 at the request of Gov. Jim Pillen, who testified that it would ensure community colleges receive the funding they need, while also correcting an “extraordinary inequity” in Nebraska’s tax structure. He said it should be the state’s responsibility to fund community colleges, not local property taxpayers.

At the chamber’s legislative update, Sen. Murman told constituents that community colleges are currently funded 40 percent by state funding; 40 percent by property taxes; and 20 percent by tuition.

“Community colleges would keep their local boards and the only thing that they would lose would be the ability to levy property taxes,” Sen. Murman said. He said that community colleges would continue in their current roles working with the local business communities to provide training as well as providing introductory courses for those planning on going on to earn a four-year degree. “I think we need more cooperation between all of our colleges – the university, state colleges, and community colleges – to just be more efficient in education,” Sen. Murman said.

Sen. Murman acknowledged that there was no way to eliminate the risk that a future legislature may decide to stop funding for a particular community college. “But I haven’t heard anybody that says anything like that,” Sen. Murman responded to the question.

He said the main reason he introduced the bill was to shift the tax burden for community colleges from property taxes to state-provided income and sales tax. “I don’t want to get away from local control at all. At least by keeping the local boards they still can decide everything else except maybe the amount of taxes to levy,” Sen. Murman said. He said the built-in 3.5 percent increase per year would allow for growth and that any current bonding levy would continue until the bond is paid off.

In the hearing held on Feb. 3 before the Revenue Committee, Jacy Schafer testified in support of the bill on behalf of Nebraska Cattlemen and the Nebraska Corn Growers Association. She said the amount of property taxes collected by community colleges has increased by approximately 80 percent over the past decade.

“While community colleges might be an affordable option for those enrolled,” Schafer said, “they are becoming far less reasonable for the property taxpayers footing the bill.”

Neal Stenberg testified in opposition to LB783 on behalf of Southeast Community College, saying future lawmakers would not be bound to continue funding community colleges at the proposed level. He said an “arbitrary” 3.5 percent annual increase in funding would not meet each college’s needs, which can fluctuate from year to year. He also voiced concern about the ability to pay for capital improvements and financing projects in the future.

Diane Keller, a member of the Nebraska Community College Association board of directors, also testified in opposition. Taking away locally elected college boards’ levy authority would limit their ability to offer new programs that meet their community’s needs, she said.

“Why are we looking at trying to change something that has worked well for 50 years … and has been proven to provide the workforce that we really need in our local areas?” Keller said.

The chamber’s next legislative update with Sen. Murman will take place on Feb. 23 at 8:00 a.m. The chamber invites members to attend, either via Zoom or at the second floor board room of the Keystone Business Center.