Standing on a well-worn marble floor in a hallway just outside the legislative chamber of the Nebraska State Capitol, Casey Schuhmacher, a 30-year-old from Whitney, Nebraska, paints a clear picture of how his family’s cow-calf and cattle stocker operation has suffered due to high property taxes. Their property tax bill has climbed 115 percent over the last 10 years. While the excessive tax burden has been difficult on their operation, the most telling part of their property tax story has to do with someone else entirely.
“Our property tax bill took someone’s job away. It cost a hired man his job. The salary we used to be able to pay for that job now goes to pay our property tax bill,” said Schuhmacher. “We hear lots of talk about growing Nebraska, but the reality is property taxes are holding Nebraska back.”
The importance of the Legislature acting this session to fix the state’s property tax problem isn’t lost on Schuhmacher, a Dawes County Farm Bureau member, who drove 461 miles to take part in Nebraska Farm Bureau’s Day at the Capitol event in support of LB 829, one of several bills supported by Nebraska Farm Bureau targeted to addressing property taxes this legislative session.
“I came to Lincoln because it’s critical for the Legislature to understand we are at a make or break point in Nebraska right now. If we don’t solve the property tax issue, you’re going to see my generation farming in places like Kansas and South Dakota,” said Schuhmacher.
Living 15 miles from the Nebraska-South Dakota state line and 40 miles from the Nebraska-Wyoming border, Schuhmacher has plenty of ammunition to make his point.
“My in-laws bought a place in Wyoming. When we compared it to a similar sized property of the same nature in Nebraska, we found the annual property taxes on the Nebraska property were $14,000, while the property taxes on the Wyoming property were only $730,” said Schuhmacher.
According to Schuhmacher, high property taxes are strangling producers, and are now the highest operational expense for many farmers and ranchers across the state.
“It’s preventing us from investing in our operation and growing our business. If I would go buy new machinery next year, property taxes would still be my greatest expense.”
Schuhmacher, like numerous other Farm Bureau members, has made the trek to Lincoln this session to deliver that message in person.
“This is the moment for the Legislature to step up and lead, no matter how unpopular it is, no matter how difficult it is. Nebraska property taxes are a problem. People are frustrated. If the Legislature doesn’t do anything, people are ready to show them what the second house is for by the way of a petition drive,” said Schuhmacher.
Schuhmacher is not alone in his pursuit of leadership and legislative action. With the Nebraska Legislature crossing the halfway point of the 60-day legislative session, slated to end April 18, Nebraska Farm Bureau continues to work with numerous interests to find a solution that will provide property tax relief for Schuhmacher and Farm Bureau members across the state.
“There are several pieces of the legislative puzzle on the table that could deliver meaningful property tax relief to Nebraskans this session,” said Bruce Rieker, Nebraska Farm Bureau vice president of governmental relations, Feb. 21. “Hopefully, the Legislature will come together as a body to put the pieces together in a way that can generate the 33 votes needed to get a meaningful property tax relief package across the finish line.”
According to Rieker, the issues the body must work through are straight forward.
“They need to determine the amount and timing of the relief, how that relief should be delivered, as well as how they pay for it. Those are the issues they will be dealing with. As it stands today, there are four bills that have gotten the bulk of the attention and have received general support from Nebraska Farm Bureau,” said Rieker.
The bills Rieker refers to are:
- LB 829 - Introduced by Sen. Steve Erdman of Bayard, the bill establishes a state refundable income tax credit for those who file income taxes in Nebraska. The refundable credit would be equal to 50 percent of the property taxes paid to K-12 education, minus property taxes paid for school bonds and voter approved levy overrides. If adopted, the bill would make changes in January 2019 and is projected to deliver nearly $1.1 billion in property tax relief by fiscal year 2020-21. The bill does not include specifics about how to pay for the tax credits.
- LB 947 - Introduced by Sen. Jim Smith of Omaha at the request of Governor Ricketts, proposed changes to the introduced version of the bill would target a refundable income tax credit to homeowners and agricultural landowners. The pending proposal would establish a refundable income tax credit at 12 percent of property taxes paid, with a gradual increase to a 30 percent refundable income tax credit by 2031. The credit would be funded in the near-term using dollars currently allocated to the state’s property tax credit fund and by growth in state revenues in future years. The bill also lowers the top individual and corporate income tax rates and commits dollars to state workforce development.
- LB 1084 - Introduced by Sen. Tom Briese of Albion, the omnibus bill raises roughly $435 million in revenues by eliminating sales tax exemptions and certain income tax breaks, and increasing the state cigarette and sales tax rate, among other provisions. The monies would be used to inject more than $300 million into the state’s property tax credit fund, reinstate the 20 percent allocated income tax component to help fund schools, and restore school funding cuts implemented last year. The bill also includes a “soft” property tax asking cap on local K-12 schools and calls for a study of education funding.
- LB 1103 - Introduced by Sen. Curt Friesen of Henderson, the bill would provide a minimum amount of state aid for each school district. Today 178 of the 244 school districts in Nebraska receive no state equalization aid. LB 1103 would ensure each district, at a minimum, would receive 25 percent of basic funding calculated under the state aid to schools formula. The bill would primarily aid districts that currently receive no equalization aid while holding equalized school districts harmless. It’s estimated the bill would generate roughly $193 million in additional state aid to fund schools to indirectly help lower property taxes.
“In terms of a legislative fix, those four bills collectively contain a majority of the components needed to reduce the state’s overreliance on property taxes, but it’s unlikely any of them standing alone would garner the 33 votes needed for passage. The Revenue and Education committees have work to do in the coming weeks to bring the pieces together and Farm Bureau will be there to help in the process,” said Rieker.
While finding a legislative solution has and continues to be Nebraska Farm Bureau’s preferred method for delivering relief, the organization is keeping its options open. That includes support for a ballot measure to force action should the legislature fail to find a significant solution to the property tax issue. The Nebraska Farm Bureau Board of Directors recently authorized a $100,000 contribution to a recently formed campaign committee, “Yes to Property Tax Relief.” The Committee is organizing the work to initiate a petition drive for property tax relief.
“We chose to make that contribution now to help ensure the ballot is a viable option to address property taxes if the Legislature fails to act and we’re forced to go that direction,” said Nelson. “We have plenty of members like Casey Schuhmacher out there who are looking for relief. We’re doing everything we can to deliver, whether it’s within the walls of the State Capitol, or giving Nebraskans the chance to vote for property tax relief on the ballot next fall.”