35 Percent Petition Folds; Property Tax Relief Unlikely

Newspaper Says LB1106 — Changes to State Aid and Property Tax — is ‘Effectively Dead’

The Nebraska Legislature has not met since mid-March, and no date has been set to reconvene in order to finish the session’s deliberations and action.

That does not mean, however, that the coronavirus pandemic has caused all to go quiet on the political front.

For instance, backers of a controversial statewide petition drive aimed at slicing property taxes by 35 percent “formally suspended” the campaign in April. Supporters cite the pandemic and resulting limited personal contact for collection of signatures as the reason for the campaign’s derailment.

NSEA and other education organizations, along with the governor and several state senators, said the petition plan would slash property taxes by 35 percent, with no method to replace the resulting loss of an estimated $1.5 billion in local government revenues. The plan would have crippled school district budgets.

Meanwhile, the Legislature went into hibernation with Sen. Lou Ann Linehan’s flawed LB1106 still on the docket. LB1106 proposed shifting $130 million in state monies to schools in FY2020-21 to reduce property taxes. NSEA and most other education organizations oppose LB1106 because it would further constrict state-imposed budget lids and levies for school districts. It would also alter the state aid formula and rely on projected increases in state revenue growth – increases that have all but evaporated given the economic impact of the pandemic – to pay for short-term property tax reduction.

A Lincoln Journal Star editorial urged state senators to scrap LB1106 and use the months before the 2021 session to take a “hard look” at property taxes.

The Journal Star wrote “with the unprecedented instant drop in economic activity and the accompanying record increase in unemployment filings triggered by the virus, state tax receipts will be significantly lower than anticipated for at least three months and, realistically, far more.

“Combine that fiscal reality with the political reality surrounding the bill and it is hard to find a reason why the Legislature should spend any more time debating an effectively dead proposal” (emphasis added).
Instead, editors said senators should spend time between sessions reviewing all tax policy and crafting a bill from all parties that “addresses property tax relief by rebalancing property taxes with sales and income taxes.”

Also left unresolved was the fate of Sen. Wendy DeBoer’s LB1073 and LB1023, property tax relief bills favored by NSEA.

Appropriations Committee Chair Sen. John Stinner said COVID-19 erased property tax relief opportunities for the year. He estimates that a 10 percent drop in tax revenues would eliminate $500 million in state revenues — the amount state leaders hoped to have available for property tax relief and other legislation.

University of Nebraska System officials said NU will also feel financial shortages.  NU President Ted Carter said  a shortfall of $50 million is expected in the current budget year, with more “economic pain”  to continue into the 2020-21 school year.