Sen. Murman hears concerns over 'tax shift'

McCOOK Neb. — During a regular call with the McCook Chamber of Commerce, Senator Dave Murman focused on two central committees, the revenue and the education committees, particularly concerning Nebraska’s school funding and property tax relief by increasing foundation aid by $1,500 per student for the next school year.

The proposal includes a 3% cap on local school spending increases, requiring a 70% vote to exceed it. Any excess spending can be carried forward up to one year.

The additional state funding for schools will be front-loaded, replacing the current refund credit system for property taxes. The goal is to alleviate Nebraska’s growing property tax crisis caused by over-reliance on property taxes for school funding.

The comprehensive package includes eliminating certain sales tax exemptions and possibly introducing a sales tax increase of up to 1% based on revenue performance. The Senator supports the package but anticipates potential filibustering and hopes for the successful passage of the legislation before the end of the session.

Mayor Linda Taylor asked the Senator why there is a hurry to raise sales tax, saying, “We were told that if we had the casinos passed in Nebraska, that would go for property tax relief. And I am hearing that the casinos generated possibly a million and a half property tax relief in the short time they’ve been open.”

Murman replied that sales taxes from casinos are coming in above projections and that it’s helpful but a small amount of tax revenue.

Taylor followed up by asking, “Do you understand why the Nebraska Chamber of Commerce and the Nebraska Retail Federation oppose the increase in property tax? Have you read the full 63 pages of the bill?”

He stated that he understood why retailers were against the sales tax increase but did not understand why the Chamber would be opposed. He continued to say that his priority in campaigning has been to decrease property tax.

Ronda Graff, who was in attendance, raised the concern that a large amount of land is owned by people who are not residents of Nebraska. These people do not pay sales tax because they do not shop here. “You’re shifting the burden to the lower- and middle-income. How do you justify those people who have the funds, the large landowners who will benefit from this? This is to shift it to the lower income,” Graff said.

Murman responded by saying that part of the package would eliminate utility taxes. He recalled the farm crisis of the 1980s and that he could see something similar happening now if property taxes were not lowered. He shared his concern about retired homeowners being forced from their homes due to an inability to pay property taxes.

Dale Dueland joined the conversation by bringing up the homestead exemption available to older Nebraskans who still live in their homes and qualify for the exemption. Dueland contended that the argument that property taxes force retired individuals from their homes is false.

The Senator responded by stating that they have worked to improve the Homestead Exemption.

Pam Frecks shared her concern that if there isn’t some property tax relief, there will be more and more acres owned by outside entities because she said, “It is the tax burden driving people out of agriculture.”

Murman agreed, saying that if we have exorbitantly high property taxes in Nebraska, it makes agriculture less competitive.

Dueland interjected that lower property taxes attract outside buyers. He also noted that the tax shift can take away the decision-making ability of the local level.

McCook City Manager Nate Schneider shared his concern about LB686 — Adopt the Cities of the First Class Firefighters Cash Balance Retirement Act; the city would be responsible for paying two years of retirement for firefighters before age 65 without any assistance. Schneider said, “My biggest concern right now is, without further discussion, trying to figure out how to incorporate such a change into our budget. I don’t know exactly how we would be able to accommodate that. I just read the text, and it appears to me that’d be the largest unfunded mandate placed upon municipalities of the first class in the last 30 years.”

Murman requested more information about that issue and stated, “Yes, I would vote against that and speak to it if you could send me some information.”

Schneider invited the Senator to visit McCook for a tour of our community and review our budget.

“I think it would be very helpful, so that way you can see why we do things and how we do them and why decisions have been made the way that they’ve been made. And you know, maybe give you a better understanding at the local level of how things work.”

Murman ended the call by saying, “I’d love to do that.”