Valuation adjustment for destroyed property advanced

Lawmakers gave first-round approval April 9 to a tax cleanup bill after amending it to include a provision meant to provide tax relief to those whose property has been destroyed by a natural disaster.

Sponsored by Elkhorn Sen. Lou Ann Linehan, LB512 would make several technical changes to state tax law requested by the state Department of Revenue.

As introduced, the bill would allow a property owner to petition his or her county assessor for a reassessment of a property’s value for that year if the property is destroyed or damaged by a major calamity—such as a fire, flood or tornado—between the assessment date and July 15.

A Revenue Committee amendment would have removed that provision, but lawmakers voted 41-0 to amend the committee amendment with a proposal by Sen. Steve Erdman of Bayard.

His amendment would require a county assessor to report to the county board of equalization all real property that is destroyed by fire or other natural disaster between Jan. 1 and Oct. 1 of any year.

The county board then would adjust the value of the destroyed property based in part on the portion of the year during which the property was intact. The board’s action would apply only to the current assessment year.

Omaha Sen. Steve Lathrop said the proposed change would mean that a political subdivision could make up for lost property tax revenue on destroyed property only with a significant levy increase on remaining property. He said it also could reduce a political subdivision’s revenue to the extent that it cannot rebuild damaged infrastructure if a large portion of its property tax base is destroyed, as happened when tornadoes hit Hallam and Pilger.

Sen. Curt Friesen of Henderson supported Erdman’s amendment. He said the proposal would not have a large effect on a political subdivision’s property tax revenue because the reduced valuation for destroyed property would last for only part of one year.

Sen. Robert Clements of Elmwood also supported the amendment, saying wholesale destruction of a community is rare and that other funds are available to support residents in those instances.

Senators voted 41-0 to adopt the committee amendment and advanced LB512 to select file on vote of 42-0.