Agricultural property tax credit increase considered

The Revenue Committee held a hearing March 24 on a bill meant to reduce property taxes on agricultural landowners.

The committee first heard testimony on LB958 last month. Introduced by Grand Island Sen. Mike Gloor on behalf of Gov. Pete Ricketts, the bill originally was drafted to limit annual aggregate agricultural and horticultural land valuation increases to 3 percent and tighten spending limits on local governments in an effort to slow property tax growth.

Gloor proposed a new amendment that would replace the bill, calling for a second hearing. The amendment would limit to 3 percent the amount of unused restricted funds that community colleges could carry forward from year to year.

It also would grant $234 million in property tax credits for tax year 2017. Gloor said $30 million of those credits would go to agricultural and horticultural landowners.

John Hansen, president of the Nebraska Farmers Union, spoke in support of the amended bill. He said the union would have liked to see structural, long-term changes to how the state funds K-12 education, which relies heavily on property taxes. The proposed measure would, however, provide farmers with some property tax relief sooner rather than later, Hansen said.

“Even a really skimpy bird in the hand is better than one in the bush,” he said.

Dave McCracken, speaking on behalf of the Nebraska Cattlemen, agreed, saying that the proposal would be a first step toward providing more significant property tax relief in the future. He said the difference in the amount of property tax paid per calf in Nebraska compared to neighboring states is “immense.”

Dale Kruse, chairperson of the board of governors for Southeast Community College, spoke against the proposed amendment. He said it would remove the board’s authority to access unused budget authority that it needs to replace aging facilities, build new learning centers and purchase new equipment to support technical training programs.

Johnathan Hladik, policy program director for the Center for Rural Affairs, also testified against the proposal. Approximately two-thirds of the credits would go to the state’s wealthiest farmers, he said, leaving only $9 million for smaller farms. The measure also would make it less likely that the Legislature would make significant changes to property taxes in future sessions, he added.

“We’re concerned that this proposal provides just enough token relief to remove from this body a sense of urgency that many landowners in Nebraska do not have the luxury of escaping,” Hladik said.

The committee voted 7-0 to advance the bill to general file with the new amendment.

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