A second approach to property tax relief

In my last article I discussed one proposal that is being championed as property tax relief for all property tax payers in Nebraska. That plan would rebate 50% of your property taxes paid to support your local K/12 school district. The price tag is approximately one billion dollars. This amount of money will come from spending cuts, and some of it could be made up by removing some sales tax exemptions. I asked what my constituents thought of this plan. To everyone who talked to me or sent me an email, I want to say thank you. Most of the people who contacted me were willing to look at an expanded sales tax base in order to have property tax relief.

This week I want to explain another approach to tackling our property tax problem. This plan involves putting in place a set of triggers that will automatically divert state income tax and sales tax revenues into the property tax relief fund. The state of Nebraska has a historical growth rate in tax revenue of about 5% annually. Under this proposal, any year that the state’s revenue grows by 3% or more that revenue would be diverted into the property tax relief fund to be distributed among all property tax payers. There would need to be a cap placed on the amount of repurposed revenue at 4.5%. If the state’s revenue growth exceeded 4.5% in a given year that money could be directed toward income tax relief or the expansion of state government. The appealing thing about this plan is that it does not cost the state any money until it is in the state’s coffers because of increased revenues.

The reason we need to leave the first 3% is because it takes about that amount just to keep the state even with inflation. A couple of the less appealing things about this plan are, it does not provide immediate property tax relief as the one discussed earlier nor does it provide property tax relief every year.

As with the first property tax relief proposal, I am interested in what you think about this second idea.

On another property tax related issue. I often get questions about school land. School land is the real estate owned by the State of Nebraska for the benefit of educating our children. In prior articles, I have explained how the school land came to be, how the income is generated, and how the money is divided among the counties and students. But the question came up where does it show up on my schools’ income side of the ledger. Of the two funds the Board of Educational Lands and Funds makes distributions from, the in-lieu of tax (real estate tax) monies goes directly to the county treasurer to be paid to the appropriate school districts.

The second payment is made to the Department of Education Trust Fund; it is then distributed on a per pupil basis to every school district in the state, usually in February.