A bill proposed to the Revenue Committee Feb. 4 would freeze property valuations for three years unless the Legislature passes a property tax reform law.
Introduced by Sen. Jerry Johnson of Wahoo, LB940 would freeze valuations on all classes of property at their 2016 levels until the end of 2019, unless the Legislature passes a law that reduces the percentage of school funding provided by property taxes. Property tax credits during this “stabilization period” would remain the same as they were for the 2016 tax year and political subdivisions would be allowed to increase their levy limits only if the state budget grows.
If the Legislature would fail to pass reform legislation before the end of the stabilization period, assessed values would increase by the same percentage as the increase in the state budget from one fiscal year to the next.
Johnson said the stabilization period would give the Legislature time to pass comprehensive tax reform that would reduce the state’s dependence on property taxes to fund public education.
“I truly hope that we can pass property tax relief this year,” Johnson said. “I offer this in case we are not able to pass new tax regulations.”
Bruce Rieker, vice president of government relations for the Nebraska Farm Bureau Federation, testified in support of the bill. He said LB940 would create an incentive for the Legislature to change the state’s property tax policy before the end of the proposed stabilization period.
Larry Dix, executive director of the Nebraska Association of County Officials, opposed the bill. He said it does not consider changes in use of a parcel of land during the stabilization period. If a farmer chooses to irrigate land that is classified as grassland during that period, Dix said, the local government should have some provision that would allow it to assess the land at a higher rate.
The committee took no immediate action on the bill.