Proposals to Limit School District Tax Increases Considered – Unicameral Update
The Revenue Committee heard testimony Jan. 20 about two bills that, with some exceptions, would cap annual increases in the amount of property taxes collected by public school districts.
Albion Sen. Tom Briese, sponsor of LB986 and LB987, said a cap on public school tax authority is “essential” if the legislature is to direct more state funding to schools for the purpose. reduce an overreliance on property taxes to fund public education. .
Under LB986, a district’s property tax claim—the amount of taxes requested to be collected through its levy—could not exceed its property tax claim authority, which the Department of Education of the State would calculate each year.
A district’s property tax claim would increase by the next highest percentage:
- the base percentage growth, equal to the percentage increase in the consumer price index for all urban consumers, or 2.5%, whichever is greater;
- 40% of the annual percentage increase in student enrollment in the district;
- 25 percent of the annual percentage increase in students with limited English proficiency in the district; Where
- 25% of the annual percentage increase of poor students in the district
The resulting amount would then decrease by an amount equal to the increase in a district’s non-land revenue, which includes some state sources. If revenue from these sources decreases, a district’s property tax claim will increase by an equal amount.
Briese said this “floating cap” would ensure that any new state support for public schools would result in property tax relief. At the same time, he said, LB986 allows for “reasonable” tax increases for fast-growing districts.
LB986 would also allow a district to exceed its property tax claim power by an amount approved by 60% of legal voters. A 75% majority of a school board could exceed a district’s property tax request power by 4-7% depending on the number of students enrolled.
The limit would not apply to the portion of a district’s property tax claim necessary to pay principal and interest on approved bonds.
Under LB987, a district’s property tax claim could not increase by more than 3% over the previous year or the percentage increase in inflation, whichever was greater.
Briese said the bill would allow a district to exceed its property tax claim by a factor based on real estate assessment growth. A district could also exceed the limit by an amount equal to a reduction in state aid resulting from an increase in value.
Under certain conditions, a district could also exceed the limit by a majority vote of its council or by an amount approved by a majority of registered voters.
The limit would not apply to certain portions of a district’s property tax claim, including amounts budgeted to pay for certain health and safety risks or amounts pledged to retire approved bonds. It would apply to property tax claims established from 2023 to 2028.
Nicole Fox testified in support of both bills on behalf of the Platte Institute. She said Nebraskans generally don’t want to cut public school funding, but want to keep property tax increases “reasonable.”
“Requiring a people’s vote would give taxpayers the opportunity to say ‘no’ if increases are inappropriate at the time or to approve a waiver if [school] the boards made good arguments for that,” Fox said.
Bud Synhorst testified in support of both proposals on behalf of the Lincoln Independent Business Association. He said the LIBA supports proposals that limit local tax authorities to their previous year’s tax claim multiplied by inflation and real estate growth factors.
“It leaves room for needed growth in our community and our subdivisions without placing too heavy a burden on ratepayers,” Synhorst said.
Craig Beck testified against LB986 and LB987 on behalf of OpenSky Policy Institute. He said the LB986 cap could interact with existing school levies and budget limitations in a way that prevents some schools from accessing their full property tax claim authority.
Additionally, Beck said, requiring districts to reduce their property tax claims by the amount of non-property revenue they receive could violate federal coronavirus aid funding requirements.
Jack Moles testified against both bills on behalf of the Nebraska Rural Community Schools Association, the Nebraska Council of School Administrators, the Nebraska State Education Association, and other school organizations.
He said the measures would make it harder for schools to raise salaries in a bid to address shortages of teachers, paraprofessionals, maintenance workers and bus drivers.
Jason Buckingham also testified against both proposals on behalf of the Greater Nebraska Schools Association and Ralston Public Schools. In some cases, he said, neither bill would allow a district to increase its property tax claim enough to offset a reduction in state equalization assistance caused by large increases. valuable.
The committee took no immediate action on either bill.