Property Relief Package Gets 1st Round Approval

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    The property tax relief portion of the Nebraska Legislature’s push for a tax relief package received 41-0 first-round approval on Monday. 

     The plan, in part, reduced property taxes by using state revenue primarily from income and sales taxes to increase two existing programs that reimburse property owners for part of what they pay in property taxes.

     It adds $247-million dollars to the property tax relief credit fund, increasing the total annual investment to $560 million by the 2029 tax year. The fund would grow in subsequent years at the same rate as property valuations statewide. 

     It removes the 5% cap on the growth of the state income tax credit program for school property taxes, allowing the credit to keep pace with valuation increases, which are currently greater than 5% a year.

     The bill has a new “soft” cap on K-12 spending growth of 3% of “total revenue” growth, except in districts experiencing rapid population growth. Districts could exceed the cap if 70% of school board members or 60% of voters agree. 

     Community colleges would lose their ability to levy property taxes with state money replacing that revenue, about $300-million a year, with a yearly increase of 3.5%. If the state falls short, the colleges could resume the property tax for the difference.

    The bill also restores TERC, the Nebraska Tax Equalization and Review Commission, to 4 members to reduce a backlog of property tax valuation appeals at the state level. The commission had four members until 2010.

    Revenue Committee chair Lou Ann Linehan described the property tax package as vital to securing passage of the income tax cut package, saying any changes beyond her committee’s amendments risks forcing negotiations on other parts of the tax-relief package and could put passage of the whole plan at risk..