Steve Nelson“Half-Time” Allows Regroup on Tax, School Funding Reform

Although we’re still a few months away from the 2019 Husker football season, there’s never a bad time for a good football analogy. While property taxes and school funding are not a game, I can’t think of a better way to share Nebraska Farm Bureau’s perspective on the Legislature’s efforts to fix K-12 school funding or address the high property taxes that have occurred due to flaws in that system.

As you know by now, the Legislature ended its 90-day session early, without a “win” on either front. While some will point to the placement of an additional $51 million into the state’s Property Tax Credit Fund as a Legislative win, it’s a not a long-term solution to our state’s property tax problem. Only structural reforms in education funding can deliver that.

The Legislature just completed the First Session of the 106th Nebraska Legislature. When lawmakers return in January, they’ll start the Second Session. That means the key bills that were in play last session will still be in play come January. Most of the key ideas for fixing the problem are already on the table. Senators won’t need to spend time wading through hearings and can jump right back into the fray. Similarly, the players will be the same. There are no elections to cause turnover, nor will there be any key changes in leadership positions.

For all intents and purposes, the Legislature is at “half-time” on the tax and school funding reform issue, and we still have a long way to go before the final gun sounds.

While the first half of a football game is about implementing a game plan, half-time is about reviewing what worked, what didn’t, and adjusting to improve the chance of winning.

Let’s start with what’s worked this past session. For the first time in years, the Legislature advanced a bill to the floor for debate that would make structural and fundamental reforms to the way Nebraska funds schools. While not perfect, LB 289 would have reversed the long-standing trend of K-12 school funding being shifted from the state onto the backs of property taxpayers. By guaranteeing the state would cover at least one-third of every school district’s needs and providing per-student foundation aid, the bill would help schools lessen their reliance on local property taxes for funding. It also would address inequities, where the state is covering the majority of school funding costs for some of Nebraska’s K-12 students, while providing little to no support for others.

On the flip side, LB 289 would have funded the additional state support to schools by further broadening funding sources and generating new revenue. The bill proposed to increase the state’s sales tax rate, eliminate some service-based sales tax exemptions, raise the cigarette tax and remove the personal property tax exemption, all to help fund schools. The comprehensive nature of the bill made it a heavy lift, and generating new revenues to provide property tax relief made some senators uneasy.

With that said, it’s widely speculated that 28 senators would have voted to support LB 289 had it been taken to a vote. That’s five votes short of the 33 needed to end a filibuster and advance a bill, which is the norm in the Legislature today. A six-month “half-time” presents a real opportunity for senators who campaigned on property tax relief (which was most of them) to regroup and work through the issues that surfaced on LB 289 this session.

There’s a lot at stake in the discussions. With a goal line stand in the last few days of the session, a bill to extend the state’s corporate incentives failed to advance, largely due to several senators sending a message that the body must deliver property tax relief first, a message Nebraska Farm Bureau had shared with senators all session. What transpires between now and when the Legislature convenes next January will likely dictate the fate of both bills.

It’s clear that fixing the overreliance on property taxes to fund our K-12 schools is the right game plan. Now is the time for our elected leaders to huddle up, tweak the playbook, and get on the same page to make sure they can deliver a “win” in the second half. That’s what Nebraskans expect and deserve, and Nebraska Farm Bureau will be doing everything it can to help advance the cause.

Until Next Time,

Steve Nelson