The latest armaments in the battle to control property taxes should arrive in the mailboxes of Nebraska property owners next month.
The weapons? Giant postcards — pink in most counties — emblazoned with “NOTICE OF PROPOSED TAX INCREASE†across the top and with smaller type detailing how the proposed budgets of major local taxing entities could affect the specific owner’s pocketbook in the coming year.
The cards will also inform property owners about new public hearings for people wanting to have their say about taxes or to learn more about the proposed budgets.
The postcards and hearings are part of a state law officially titled the Property Tax Request Act, but dubbed by supporters as “Truth in Taxation.†The law was passed in 2021 but takes effect this year.
Sen. Ben Hansen of Blair, who introduced the measure, said the law will not directly lower property taxes but could help keep them in check by making local elected officials more accountable for decisions that increase tax collections.
“They now have to think harder about raising taxes due to the fact that when they do every constituent in that community will get direct and blunt notification of that decision,†he said. “They will have to answer to the taxpayers in a special hearing, at a special time, in a special place with recorded votes.â€
Hansen said he also hopes the new process helps citizens get more involved in local budget-setting and the decisions that increase property taxes. The law requires the public hearings to be taxpayer-friendly, with starting times after 6 p.m. and only one hearing per county covering all local subdivisions rather than one for each taxing entity.
“The goal is, over time, getting people a little more engaged,†he said. “To ultimately bring true property tax changes, it’s up to the people to make that happen.â€
Jim Vokal, CEO of the Platte Institute, an Omaha-based think tank, hailed the new process as “something big†for taxpayers. He said it will shine a brighter light on local officials by making property tax decisions more transparent and will give taxpayers a better opportunity to intervene.
Currently, he said, local officials often tout budgets that hold property tax levies flat or even decrease levies. What they don’t always make clear is that taxpayers may end up paying a higher total bill because of valuation increases.
“Officials don’t want taxpayers to know that,†he said. “It’s an honesty gap situation.â€
Vokal said Utah has held the line on property taxes since passing a similar law in 1985. That has improved the state’s ranking on a measure of property taxes per $1,000 of personal income from 24th-lowest before the law took effect to 14th-lowest in 2019.
Nebraska, by contrast, ranked 41st-lowest in 2019, virtually unchanged from the mid-1980s.
In Kansas, which adopted a property tax transparency law recently, more than half of the taxing subdivisions kept their property tax collections flat this year, Vokal said.
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Jon Cannon, executive director of the Nebraska Association of County Officials, said the Nebraska law may have a similar effect on local governments here. But he said he doesn’t know how many local governments will end up having to send out postcards and hold hearings.
“I think there will be some that say we want to avoid being on the postcard,†he said. “I think there will be some that say we have needs or will be affected by inflation. It’s just going to depend on what the needs are and all the decisions that our public officials are making.â€
In Utah and Kansas, the notice and hearing requirements apply anytime a taxing entity proposes to collect more property taxes.
The Nebraska law allows more leeway. It only kicks in when local governments want more than a 2% increase in property tax collections on existing property. Higher tax collections resulting from real growth, that is, new construction or property improvements, do not count toward the 2% threshold.
The Platte Institute’s Adam Weinberg said the threshold was a concession made to get the bill passed. Government subdivisions that increase tax collections but stay below that level still have to have a public hearing and a vote, based on an earlier law, but they do not have to send out the postcards or have the special hearings.
The Nebraska law also applies only to counties, cities, school districts and community colleges, which account for the bulk of property tax bills, leaving out other taxing entities, such as natural resources districts, educational service units and townships.
Under the new law, all subdivisions in a county that hit the tax increase threshold must appear at the same hearing, which must be held between Sept. 17 and before Sept. 29. The goal is to save taxpayers from having to attend multiple hearings. But the format could prove daunting if several local governments have to participate.
Douglas County Clerk Dan Esch said 13 subdivisions, including four cities and seven school districts, could potentially be required to be part of the Douglas County hearing, which has already been set for 6:05 p.m. Sept. 21 at the City-County Building, 1819 Farnam St. in Omaha.
The law requires each participating subdivision to give a brief presentation about the proposed tax increase, followed by time for people to speak.
Entities that cross county lines, such as community colleges and some school districts, only have to be part of the hearing in the county where they’re headquartered, but Cannon said information would have to be sent out to taxpayers in all counties affected.
The postcards also may prove confusing to some people, Cannon said. The law requires the cards to give specific information, including a property’s current valuation and its new valuation. Also required are the current taxes on the property, the proposed tax bill and the difference between the two for each subdivision included on the card.
But the tax amounts shown could differ from an owner’s actual tax bill because they do not account for homestead exemptions or property tax credits. Taxes for an individual property could increase more or less steeply than the overall increase for a local government, because of what happened with that property’s valuation.
Hansen acknowledged the rollout of the new process could be rocky. However, he expressed hope that the new hearings will bring out more people than traditional budget hearings, which typically draw sparse attendance.
“How do you get people to care?†he asked. “You show them how much money we’re taking from them. I think that’s what we’re trying to accomplish with this.â€