Final property valuations — the amount of assessed property value local governments and school districts use to figure property tax revenue to support their budgets — increased more than 11% for the city, county and Lincoln Public Schools.
Those governmental subdivisions knew assessed value would jump significantly, since the Lancaster County Assessor’s office did a revaluation of residential property in light of a turbo-charged seller’s market.
The county assessor this week certified the assessed values for each of the subdivisions in the county. There are several taxing entities that make up a homeowner’s tax bill, but the big three are LPS, which makes up the biggest chunk (61%), the city (16%) and the county (13%).
LPS' assessed valuation increased 11.4%, the city’s 11.38% and the county’s 11.08%.
The total increase in assessed property — which includes centrally assessed property and commercial property as well as residential — was largely driven by the increase in residential property, said Lancaster County Assessor Rob Ogden.
The average price of a home in Lincoln increased from $203,842 last year to $226,342 — an 11% increase.Â
While that is just an average, it means homeowners saw jumps in their homes' assessed values, which means they will likely see larger tax bills.
Local governments and school districts typically build their budgets based on an estimate of how much property tax revenue will be. The county based its budget on an estimated 10% increase, while LPS used 11%.
The mayor’s budget was based on a 6.5% increase, which meant the city was looking at a property tax surplus of about $3 million, based on a tax rate the mayor proposed keeping at the same 31.98 cents per $100 valuation it was this year.
That led to a debate between council members about how to handle that surplus.
Richard Meginnis and Jane Raybould wanted to prioritize property tax relief, while the other five council members argued for keeping $500,000 for tax relief but earmarking the rest for the city’s unmet needs.
In the end, the other five council members largely prevailed, though they agreed to at least $600,000 in property tax relief, plus any additional property tax revenue beyond $3 million.
Based on certified valuations, $958,000 will be earmarked for property tax relief.
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The rest will be used to supplement affordable housing, sidewalk repair, tree maintenance, hiring two additional firefighters, buying adaptable playground equipment and mental services.
That $958,000 will mean a slight reduction in the tax rate — close to four-tenths of a cent — from 31.98 cents per $100 of valuation to $31.582 cents, according to Sherry Wolf, the city’s budget analyst.
That property tax reduction means the owner of an average $226,342 home will save $9.01 with the lower tax rate, paying a total of $714.83 for city taxes.
But if that homeowner’s property valuation increased 11% — they will pay $71.06 more in property taxes at that lower rate than they would have this year.
Both Lancaster County and LPS lowered their tax rates by 1 cent.
LPS officials, who estimated an 11% valuation increase, will put any additional property tax revenue in its cash reserve.
Lancaster County will get an additional $833,600, Budget Officer Dennis Meyer told county commissioners Thursday. He recommended that money go into a “sink fundâ€Â — a sort of savings account — to be used for projects as needed.
The jump in residential values was sparked by a limited supply of homes for sale and huge demand that led to buyers competing and driving up the sale price, Ogden said.
He can only speculate about the reasons: maybe the pandemic convinced more people they should buy homes, millennials are finally reaching the age where they’re having kids — and buying homes.
That pent-up demand appears to be lessening, he said.
Commercial property went up less, though smaller apartment complexes saw an average 30% increase in valuation. Those properties have been undervalued in the past and the assessor’s office is trying to get them closer to market value, Ogden said.
The increase in apartments’ assessed values didn’t contribute much to the overall increase but could affect rent prices in coming years, he said.
Two factors lowered the total assessed value: $71 million in new tax-increment financing projects — an economic development tool that allows developers to use future property taxes the project generates to pay for some upfront costs — and $52.8 million in reductions from protests to the board of equalization.
The City Council and County Board will vote on their budgets next week. The school board will vote Sept. 14.