Residents of rural school districts would see an additional property tax cut under a proposal advanced to the full Nebraska Legislature on Wednesday.
Also voted out of the Legislature's Revenue Committee was an amended bill that pairs a long-sought-after tax credit for donations to private school scholarships with a proposal that would grant similar tax credits for contributions to early childhood education programs.
Both bills would require three rounds of approval by state lawmakers and a signature from Gov. Pete Ricketts to become law. Ricketts has been a consistent supporter of tax cuts, and set aside money in his budget for tax credits for donations to private and parochial school scholarships.
LB454 would provide $65 million in extra state "stabilization" aid to 170 mostly rural school districts that do not currently receive any state equalization aid. That amount would rise to $167 million after four years, providing money for 207 K-12 school districts. The bill would require districts to use the extra money for property tax relief.
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It addresses a longtime gripe of rural school districts — that due to huge increases in values of farm and ranch property, they no longer qualify for any state equalization aid because of their higher property tax base. Most of that state aid has shifted to the state's largest school districts, such as Omaha and Lincoln, leaving rural districts to shoulder their school costs through property taxes.
Sen. Curt Friesen of Henderson, the sponsor of LB454, said that his goal is to reduce property taxes in rural districts where property taxes almost exclusively fund K-12 education, by increasing state aid sent to them.
Nebraska's state support for local education is among the lowest in the nation.Â
"If we properly funded K-12 education, we wouldn't need this bill," he said.
Rural school districts such as Holdrege, Syracuse, Aurora and Central City would see state aid increases of between $1 million and $1.5 million annually after four years under LB454, according to a spreadsheet provided by Friesen.
Friesen had been unsuccessful in getting components of LB454 included in a property tax relief measure that passed in 2020. An amendment to his bill approved Wednesday removed one controversial portion of the measure that would have reduced valuations of agricultural land for tax purposes from the current 75% of market value.
On the other bill, the merging of the Opportunity Scholarships Act with the Nebraska Child Care Contribution Tax Credit act creates some odd political bedfellows.Â
The Opportunity Scholarships measure, LB364, introduced by Sen. Lou Ann Linehan of Elkhorn, has been opposed by public school groups because it provides state funds, via tax credits, for contributions to private and parochial schools. Public school groups, meanwhile, have been generally supportive of early childhood programs. Â
But Linehan disputed the "odd bedfellows" label, saying that both measures provide tax breaks for programs that benefit children. "It's something for everybody," she said of pairing the two proposals. Both tax breaks would be capped at $5 million each a year.
Ricketts set aside $2 million a year in his budget for Opportunity Scholarship tax credits. He is a former chair and board member of the Children's Scholarship Fund, an Omaha-based group that raises money for three Catholic schools in North Omaha.
The organization that governs those schools, the CUES School System, testified in support of LB364. Ricketts and his wife are listed on the "annual donors" page of the CUES website as giving between $20,000 and $49,000. Listed as giving $1 million-plus were Ricketts' parents, Joe and Marlene. Joe Ricketts is the founder of TD Ameritrade, and he and his wife are major givers to political and philanthropic causes.Â
Linehan said that CUES and its donors would not benefit directly from her Opportunity Scholarship bill, though the measure could increase donations to other groups that provide scholarships to such schools. Qualifying donations must be given to statewide groups, as opposed to those with only a local footprint, she said.