Taxes Will Dominate Debate, But Mental Health Services, Reading Will Also See Light
As the Nebraska Legislature begins, one issue overshadows all others: property taxes.
One group has filed an initiative petition seeking a budget-busting income tax credit for property taxes paid, while another group is threatening a lawsuit seeking property tax changes. State senators know that if they don’t resolve the state’s long-festering over-reliance on property taxes in this session, Nebraska taxpayers could be facing “solutions” that could do more harm than good.
So, while many issues need senatorial attention, one onlooker observed that property taxes “will suck up a lot of oxygen in the legislature this year.”
The Department of Corrections disarray will also draw a spotlight, as will a Department of Health and Human Services request for an additional $50 million in state dollars to cover increased child welfare costs.
Even with those juggernaut issues on the agenda, education is among the topics likely to rise to the fore during this session. A handful of important education-related bills will carry over from the 2017 session, and more are certain to be introduced.
Tax Cut Chatter
The property tax deliberations will play out against the backdrop of a state budget that is already $195 million or so in the hole, sprinkled with foolish talk of further diminishing state revenues through cuts to the state’s corporate and personal income tax rates. That tax cut chatter ignores any as-yet-unseen damage that will be inflicted on state income tax revenue by recent federal tax cuts, as Nebraska income tax rates are tied to federal tax rates.
Property taxes are certainly of interest to educators, particularly those who teach in the K-12 realm, where budgets are heavily funded by that revenue source. Policymakers – chiefly the governor and others in his corner – have lamented that “out-of-control” local spending is responsible for elevated property tax rates. Those remarks conveniently overlook that school spending in Nebraska has grown at a slower pace than state government in recent years, while State of Nebraska funding of K-12 schools has ranked at or near next-to-last among all states for decades. Simply raising Nebraska state aid levels to the mid-point of all states would provide hundreds of millions of dollars of property tax relief for Nebraskans.
Instead, policymakers threaten to further restrict local budget control. In August, Education Committee Chair Mike Groene voiced the idea of placing additional spending caps on already cash-strapped school budgets. He also threatened to cut state aid – which grew by just 1.18 percent last year.
There is also discussion about imposing a 2.5 percent cap on annual increases in property tax askings, with some exceptions.
Meanwhile, a group called Reform for Nebraska’s Future is collecting signatures on a petition that would give property owners a credit equal to half the amount of property taxes paid in support of K-12 schools. Sen. Steve Erdman has promised to introduce a similar plan in the Legislature in order to jump-start discussions in that arena. This tax credit scheme would blow a $1.1 billion hole in state revenues. Officials from the State Chamber to the governor’s office to the Open Sky Institute have decried the plan. Another group, Fair Nebraska, may seek property tax changes through a lawsuit filed with the Nebraska Supreme Court.
So, with that background, we give you these Five Other Issues That Are Not Property Taxes, Each in 75 Words or Less.
Mental Health Services
Anecdotal evidence indicates that Nebraska schools need additional mental health services for students. A concept bill, LB552, by Fremont Sen. Lynn Walz would create a Children’s Connection program in each of Nebraska’s 17 Educational Service Units, and provide mental health services to local school districts. Each program would be a partnership between the ESU’s, public and private schools. The estimated cost statewide is $1.2 million.
Third Grade Reading Bill
Elkhorn Sen. LouAnn Linehan introduced LB651 last year. The language would require teachers to flunk any third-grade child who was not reading at grade level. Linehan wangled the votes to pull LB651 from committee without a committee vote – a rare feat. NSEA believes the decision to hold a child back should be made by the teacher and child’s parents, not the state. NSEA testified against, and continues to oppose, LB651.
Tax Credit/Voucher Scam
The LB295 tax credit/voucher scam diverts public taxes to private schools via credits for private school donations. Credits could reach $10 million annually.
Now, private school donors receive partial reduction of federal and state income tax for each dollar donated. Under LB295, if state liability is $1,000, the donor could give $1,000 to a private school, pay no state income tax, and take federal deductions, essentially redirecting $1,000 from state coffers to a private school.
Retirement Plan Funding
Linehan will again try to end the annual state contribution to the teacher retirement plan. The state adds the equivalent of 2 percent of all school employee wages ($46.4 million) to the statewide and Omaha plans, part of a 2013 compromise in which educators agreed to higher contributions and lower benefits. The state plan is forecast to be 100 percent funded by 2030. Without the $46.4 million contribution, the state is liable for plan shortfalls.
A proposal to require the state to reimburse school districts for at least 80 percent of special education costs from the previous school year is a property tax relief bill. Modeled after LB826, introduced in 2016, the language would replace current statute, which authorizes up to a 10 percent annual increase in aid for special education programs. The fiscal note is anticipated to land at about $125 million.
Charter School Bill Lives
There is one other bill of interest to public school supporters. LB630 would authorize charter schools. It was introduced last session and still alive. It would allow charter schools to operate exempt from accreditation standards like instructional hours, curriculum, graduation requirements and other basic tenets of sound educational philosophy. LB630 also allows teachers without teaching certificates, and would compete with K-12 public schools for a limited amount of local and state funding.