State senators used a debate over a minor tax proposal Tuesday to vent about the inability of the Nebraska Legislature to solve a much bigger problemÌý— the state's historically high taxes on property.
The proposal on the agenda, LB2, would give farmers and ranchers a small property tax break when funding school bond issues and would automatically increase the state's property tax credit program by 3% a year.
But the bill served as a launching pad for a broader debate over the fairness of state property tax credits, the adequacy of state aid to K-12 education, and whether state lawmakers will ever get beyond putting .
"Structurally, nothing is changing, because we are scared to do it," said Omaha Sen. Justin Wayne.
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Elkhorn Sen. Lou Ann Linehan said everyone knows the answer is increasing state aid to fund local schoolsÌý— Nebraska ranks 48th in the nation for thatÌý— to replace property taxes. But politically, she said, lawmakers and the state's schools won't agree on a way to do it.
"We all know the answer. The answer is to fix school funding," Linehan said.
The senator,Ìýwho heads the Legislature's tax policy-setting Revenue Committee, has pledged to work on major, structural changes in the state's tax system before the 2022 session. This year, meanwhile, there's been several proposals to chip away at the problem.
LB2, introduced by Albion Sen. Tom Briese, was one of those. It would reduce the valuation of agriculture land from 75% of its actual value to 50% when it comes to the portion of the levy used for school bond issues.Ìý
Briese and other rural senators said it's unfair for people in rural towns to approve a school bond issue that requires farmers and ranchersÌý— who pay the bulk of property taxes in rural school districts and who are in a voting minorityÌý— to pay most of the bill.
But urban senators pushed back on that idea, saying it was unfair to give farmers a break and not those who live in towns and cities. There was also opposition to another proposal that would automatically increase the state's property tax credit program, which is slated to rise to $313 million a year, by 3% a year.
Compounded every year, that would create "an explosion waiting to happen" in lean fiscal times, said Gering Sen. John Stinner, who heads the Appropriations Committee.
Lawmakers adjourned at 7 p.m. TuesdayÌýbefore getting to a vote on LB2.
Earlier, legislators advanced a bill on a 31-7 vote that will devote $44 million in federal block grant funds over the next two years to increase child-care subsidies for working families.
Bennington Sen. Wendy DeBoer, who sponsored the proposal, said LB485 would provide a much-needed boost for families impacted by COVID-19.
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