The Revenue Committee heard testimony Feb. 4 on a bill that would freeze property valuations for a year.
LB717, introduced by Sen. Mike Groene of North Platte, would hold the 2016 assessed values of all property classes at their Jan. 1, 2015 values, adjusting for physical improvements or land use changes.
Agricultural, residential and commercial classes of property all would be assessed using a five-year comparable sale history, as opposed to the current three-year history for agricultural and commercial property and two-year history for residential property. The 20 percent of sales with the lowest ratio of valuation to sale price would be removed from the sale history.
Groene said agricultural property taxes in particular have grown unrealistically in proportion to inflation and income growth over the past few years. The proposed changes to how land is assessed would more accurately reflect the market and provide relief to property tax payers, he said.
It is estimated that the bill would require the state to spend approximately $43 million more in aid to schools in the 2017-2018 fiscal year to make up for lost property tax revenue.
Ken Herz, representing the Nebraska Cattlemen board of directors, testified in support of the bill. Assessment calculations that leave out sales with low ratios of valuation to sale price would more accurately gauge land values in the state’s rural areas, he said.
“In many parts of the state, the market area considered when determining comparable sales is sometimes large because there are so few sales that occur,” Herz said. “One or two sales can skew the comparable sales in that area and thus not accurately represent the true land values in that area.”
No one spoke in opposition to the bill and the committee took no immediate action on it.