The pink postcards notifying property owners of a potential increase in taxes owed to political subdivisions began landing in mailboxes this week.
For tens of thousands of taxpayers in the Capital City, however, the “Notice of Proposed Tax Increase†printed in big bold letters at the top of the postcard was not reflected in the estimated change in tax payments displayed in smaller print underneath.
About 94,000 of the 114,000 property owners in Lancaster County who received a postcard under Nebraska’s new “Truth in Taxation†law won’t see any change in the amount of taxes paid to Southeast Community College, the political subdivision that prompted the postcards to go out.
That's because the assessed valuation for most property taxpayers in Lincoln held steady this year, even as property values across SCC’s 15-county service area rose by 4.43%.
So while SCC’s property tax levy of 9.37 cents per $100 of valuation is projected to hold steady — it’s remained flat for four years — taxes will go up for property owners whose valuations have climbed, just not many in Lancaster County.
Still, under the “Truth in Taxation†law, introduced as LB644 by Sen. Ben Hansen of Blair in 2021, the county where a city, county, school district or community college is headquartered is required to send out the postcards if a subdivision's total tax requested increases by 2% or more in a single year.
“The fact that the valuation in the aggregate area pushed the allowable amount that SCC is requesting above the threshold requires us to have a public hearing,†said Stu Osterthun, SCC’s administrative director for marketing and public affairs. The postcard provides information on the public hearing.
In adhering to the law, however, SCC and Lancaster County officials said the postcards created confusion for many property taxpayers.
The subtitle on the card makes it look like it addresses Lancaster County, said Dennis Meyer, the county’s budget and fiscal director, even though the county board actually reduced its property tax levy this year.
The total tax request for the city of Lincoln and Lincoln Public Schools, likewise, did not exceed the 2% threshold.
“It’s a notice of proposed tax increase, but because it says Lancaster County, people think Lancaster County is raising taxes,†Meyer said.
The “Truth in Taxation†law was supposed to provide taxpayers with more information about how local governments are funded and grow engagement with the boards making those decisions, but Meyer said the local flap is an example of accomplishing the opposite.
“Maybe the Legislature will think this is exactly what they wanted, but it doesn’t feel to me that it’s helping the process,†he said.
Osterthun said SCC fielded 60 phone calls beginning Monday — “I could tell when people went to their mailbox,†he said — from taxpayers puzzled over what the postcards meant for them personally.
“People really didn’t understand what the card is, or if they read closely, they were really confused,†he said, specifically addressing those whose property valuations are unchanged. “It said it was a notice of a proposed tax increase, but if you go down and read the table, it’s zero.â€
Officials took time to explain to callers that SCC relies, in part, on local property taxes to fund its academic transfer and career and technical education programs at its campuses in Lincoln, Beatrice and Milford, as well as six learning centers scattered throughout its district.
Those interactions helped some understand a little better what their tax dollars help pay for, Osterthun said, while others thought receiving a notification informing them of no change to their property taxes was a waste.
Jon Cannon, executive director of the Nebraska Association of County Officials, said the group that lobbies on behalf of counties voiced concern that the law requiring postcards be sent would confuse taxpayers and create another unfunded mandate.
But once it became clear the bill was likely to pass, Cannon said the group worked with Hansen and others to improve the bill, as well as to lower the cost of the postcards from about 75 cents to 51.5 cents apiece.
Counties pay the production costs, which are split among the political subdivisions that are required to send one to taxpayers.
But Cannon has heard of oddities playing out across the state as the new law rolled out this year.
Aside from the situation in Lancaster County, other tax-collecting entities have seen their total tax requests go up more than the 2% allowed under the notification law, but in cases where valuations have dropped, those residents have received postcards showing their taxes going down.
Taxpayers in school districts that have retired bond issues or are taking on new bonds might not see those values accurately reflected on their postcards because of the timing that certification of those figures takes place, Cannon said.
And in many cases, the joint hearing required under the “Truth in Taxation†law takes place long after the decisions about valuations and tax levy rates have already been decided.
“By the time you get to these hearings, a lot of property taxes have already been baked in to their budgets for the next year,†Cannon said.
In Lancaster County, increases in the tax revenue request surpassed the 2% threshold in SCC, the Raymond Central and Waverly school districts and the city of Hickman.
A representative — not the full board, which ultimately sets the tax levy for those political subdivisions — must take part in a joint public hearing Sept. 22 at the County-City Building.
SCC's Board of Governors will meet several days later, on Sept. 27, to set the property tax rate for the budget year.
While the kinks in the new law are being worked out, Cannon said he believes that some political subdivisions held down their tax revenue increases to avoid having to send the postcards, which was the underlying intent of the “Truth in Taxationâ€Â bill.
Still, he said county officials, the League of Nebraska Municipalities, Nebraska Association of School Boards and Nebraska Community College Association plan to meet with groups that backed the law next month to see how it can be improved upon for 2023.