Property taxes, school finance discussions held

This week saw the legislature continue the discussion of the governor’s school finance and tax package. LB 243, as amended by the Revenue Committee, would make a series of changes aimed at easing the financial impact of increasing property tax valuations on Nebraska’s local property taxpayers. Among changes proposed, the measure would increase the minimum amount of relief granted under the Property Tax Credit Act to $388 million in tax year 2024 and $560 million by tax year 2029. This amount would then grow by the percentage increase in the total assessed value of all real property statewide over the prior year. LB 243 would also remove the 5% cap on growth of the state income tax credit program granted on local property tax payments under the Nebraska Property Tax Incentive Act and let the credit keep pace with the valuation changes. Other changes include (a) placing a new soft cap on K-12 school district spending growth at 3% of total revenue growth, (b) reinstating a fourth member to the Nebraska Tax Equalization and Review Commission to reduce the backlog of property tax valuation appeals at the state level and (c) removing Nebraska’s regional community colleges from the local property tax rolls and funding them with state tax dollars — a tax shift of about $300 million. LB 243 was debated for eight hours before senators invoked cloture and advanced the bill to Select File on a 41-1 vote.

LB 583 serves as one of the components of the school finance package. As amended by the Education Committee, LB 583 would ensure the state provides 80% of a school district’s special education funding needs when combined with federal funding. Additionally, school districts would receive $1,500 for each student included in the TEEOSA formula. In fiscal year 2025-2026, certain districts would see funding reduced to $600 per student per school. The bill would also reduce duplicate funding for students who use option enrollment to transfer school districts to receive just net option funding, not baseline aid. Additionally, LB 583 would require that districts report how much additional aid is received and how much property taxes are reduced.

The longterm funding for the formula changes in LB 583 would be sustained by a new education future fund that would be created by LB 681.

An amendment was offered to LB 583 by Senator Brandt. This amendment would have spread out the state aid increases called for by the Governor by distributing more aid to urban school districts and smoothing out wide disparities in property tax levies among rural school districts. However, the amendment would have pulled money from funds left over from unclaimed state income tax credits available under the Nebraska Property Tax Incentive Act which, as of September of last year, added up to $200 million. Several senators and members of the Education Committee questioned the vetting of Senator Brandt’s plan as well as the long-term sustainability of pulling money from the unclaimed state income tax credits, whereupon the amendment failed. The cloture motion to end the debate and allow for a vote on the advancement of the bill was successful, and LB 583 advanced to Select File on a 39-3 vote.

Senators also gave second-round approval to several bills pending before the body. LB 138, which is the yearly Transportation Committee bill to update state statutes with changes to federal law, was amended to include my bill, LB 453. LB 453 would better integrate the Division of Aeronautics into the Nebraska Department of Transportation by authorizing all administrative expenses to be paid out of the Highway Cash Fund, increasing the sealed bid dollar threshold for NDOT projects, and updating the State-Aid Bridge Fund statutes by reducing the amount of match a county must provide from 50% to “up to” 20% to be considered for project funding. I am thankful to the chair of the Transportation Committee, Senator Geist, for allowing my bill to be included as part of a broader package. Other bills passed by the legislature this week include LB 296 which would provide a framework for pet insurance, LB 276 which would allow for the implementation of the Certified Community Behavioral Health Clinic model in Nebraska, and LB 683 which would create the Nebraska broadband Office.

I also attend the news conference announcing the appointment of Carolyn Bosn to the now vacant seat for District 25 in the legislature. Senator Bosn will be replacing Senator Suzanne Geist in District 25, who departed to concentrate on her campaign for Mayor of Lincoln.

Feel free to call my office anytime at 402-471-2801 or email me at [email protected]. My mailing address is: Senator Barry DeKay, District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509.