Agricultural property tax credit increase advances

Senators advanced a bill March 31 that would increase the amount of property tax credits for agricultural landowners.

Introduced by Grand Island Sen. Mike Gloor on behalf of Gov. Pete Ricketts, LB958 originally was drafted to limit annual agricultural and horticultural land valuation increases and tighten spending limits on local governments in an effort to slow property tax growth.

A Revenue Committee amendment, adopted 43-1, replaced the bill and would grant $234 million in property tax credits for tax year 2017, a continuation of credits offered last year totaling $204 million. Gloor said $30 million of this year’s credits would go specifically to agricultural and horticultural landowners.

Gloor said the original bill would have reduced property tax revenue to counties by hundreds of millions of dollars and created a school funding shortfall that the state could not afford to offset. He said the proposed increase in property tax credits is the best way to direct relief to agricultural landowners.

The amendment also would limit to 3 percent the amount of unused restricted funds that community colleges could carry forward from year to year. Gloor said the measure is intended to hold down spending by community colleges, which he said have collected approximately 13 percent more property taxes per year for the past ten years.

Sen. Al Davis of Hyannis spoke in support of the bill. He said the proposal would provide much-needed relief to farmers and ranchers, who he said have seen their property taxes rise much faster in recent years than those of residential or commercial property owners.

“The time is now,” Davis said. “We can’t wait another year.”

Sen. Paul Schumacher of Columbus spoke against the bill, saying that the proposal is too small to solve the problem of high property taxes on agricultural landowners and would place the state’s finances at risk at a time when it faces a major budget shortfall.

“We have to do this in a comprehensive package that puts everybody first and that treats everyone fairly,” he said.

Schumacher filed a motion to recommit the bill to the Revenue Committee, which failed on a 10-28 vote.

Sen. Jim Smith of Papillion also spoke against the bill, saying that it provides no concurrent increase in the amount of property tax credits for commercial and residential taxpayers. He said the proposal would shift taxes onto non-agricultural businesses, homeowners and all Nebraskans who pay income and sales taxes, which are the source of funding for state property tax credits.

“We need to look at comprehensive tax reform for our state that helps all businesses in our state and that helps all families in our state,” Smith said. “I see no path forward if we don’t do that.”

Gloor introduced an amendment, adopted 44-1, that would reduce the amount of property tax credits per year to approximately $20 million. He said the amendment represented a compromise among Smith, Davis and others that would reduce the amount of property tax credits proposed for tax year 2017 but would still provide relief to agricultural landowners.

Gloor said he would introduce an amendment on select file that would remove provisions related to community college budgets. That component faces strong opposition from some senators and would threaten the passage of the bill, he said.

After six hours of debate, Gloor filed a motion to invoke cloture, or cease debate and vote on the bill. The motion was adopted on a 41-2 vote.

Senators voted 39-2 to advance the bill to select file.