Property taxes high on state priority list

Property taxes are high on the mind of everyone in the state of Nebraska right now, especially our agricultural producers. With the collapse in commodities markets, many agricultural producers are concerned about their viability to stay in business next year. As I travel the district, property tax is the number one issue I hear about. Unfortunately, there is not much the Legislature can do facing a budget shortfall of over $113 million, not counting the additional $25 million shortfall against revenue projections for this past September. The Nebraska Economic Forecasting Advisory Board will consider the September numbers, among other things, when it meets and releases a new forecast on October 28th.

I've been visiting with several bankers, not only in the 44th district but from across the entire state, and there is a real concern about a potential crisis in the ag industry because of low commodity prices and high taxes. Property taxes are currently a major expense for ag producers and must be paid whether or not they raise a crop. It is sometimes easy to think that all farmers are wealthy but there are rich and poor farmers, just like there are rich and poor lawyers and accounts and plumbers.

The real driving force behind the property tax problem is our TEEOSA school aid formula. This formula is working as designed, but that design is flawed and needs to be changed. The TEEOSA formula was designed in 1990, but the tax environment has changed significantly since then and the formula needs to be updated. The current formula didn't anticipate the run-up in agricultural property values, and that has really caused a problem in rural Nebraska. Last year alone, the increase in agricultural land values saved the state $133 million in state aid to schools. One of the remedies which I think will be brought forth in this session is broadening the sales tax base and using the additional funds for property tax relief.

Currently, the state of Nebraska has exempted roughly one-half of the goods and services on which it could charge sales tax. Over the years, we have slowly but steadily continued to grant additional exemptions for sales tax, and it is time to reverse that trend. Some things that will be looked at for taxes at the point of sale are groceries, newspapers, lottery tickets, and professional services like lawyers, tax accountants, and personal care services, just to name a few. I would certainly invite your input on this idea. Are you willing to pay additional sales tax on certain items in order to provide property tax relief? As always, I invite your feedback.

Please feel free to contact my office with any questions or concerns that you might have. My email address is dhughes@leg.ne.gov and my phone number is (402) 471-2805.You can read more about bills and other work of the Legislature at www.nebraskalegislature.gov, and you can click on the Live Video Streaming NET logo to watch sessions, hearings, and other Capitol events.