Members of the Tax Modernization Committee hear plenty of complaints about property taxes in Nebraska as they wrap up their public hearings.
The committee has held public hearings throughout the state, wrapping up with back-to-back meetings in Omaha and at the state Capitol in Lincoln.
Dunbar resident Alvin Guenther raises cattle and complains that while his property tax rate has more than doubled the past five years, the state has lavished tax breaks on corporations with suspect results.
Dave Welsch of Milford says the state tax system relies too heavily on the taxes paid by farmers and ranchers, a problem that has grown worse as the agricultural economy grows while the rest of the economy stays flat.
“Because ag land has increased in value much faster than commercial and residential property, the tax burden to support schools and counties has shifted more heavily to ag land owners,” according to Welsch.
Some argue for the status quo.
E Energy Adams CEO Carl Sitzmann says the ethanol plant south of Lincoln pays nearly $1.5 million in taxes each.
“And even though our current tax bill is quite high, we are not here asking for tax relief. Instead, we are here to ask that our tax burden not be increased,” says Sitzmann.
Others caution against making too radical a change.
Nebraska State Education Association’s Nancy Fulton of Wilbur says the committee need only look at neighboring Kansas to see what can happen when radical changes are made to the state tax system. She says the change in the tax system there has left the state with a $700 million budget shortfall, hampering the citizens’ way of life.
Gov. Dave Heineman has suggested eliminating the inheritance tax, which opponents call the death tax. Sen. Tom Hansen of North Platte asks Lancaster County Commissioner Larry Hudkins of Malcolm as a farmer, if it wouldn’t be better just to eliminate the tax.
“No, because it would increase my personal property tax 4.3% last year; I’m better off paying the inheritance tax or planning for it to be perfectly honest with you,” Hudkins responds. “I don’t like it and as a farmer and a rancher I think it’s repulsive, but unless it’s replaced by another source of revenue, it just adds to the property tax burden.”
The League of Nebraska Municipalities has argued that a return of state aid to local governments would allow cities to lower property taxes.
Lynn Rex with the League tells committee members that local governments received promises from the Unicameral years ago the state would offset the revenue lost when the legislature approved a number of tax exemptions that undermined the local revenue base.
“So, state aid was never a gift. It was never just, quote, ‘extra money’ the legislature might have laying around to send back to local governments,” according to Rex. “It was intended to offset the huge, unprecedented property tax shift to residential home owners across the state of Nebraska.”
The committee will make recommendations for the legislature to consider next year.