107A LR 22CA LPS Testimony

January 27, 2021

  • Sen. Lou Ann Linehan, Chairperson
  • Sen. Joni Albrecht
  • Sen. Elliot Bostar
  • Sen. Tom Briese
  • Sen. Mike Flood
  • Sen. Curt Friesen
  • Sen. Brett Lindstrom
  • Sen. Rich Pahls

Chairperson Linehan and Members of the Revenue Committee,

The Lincoln Public School District submits this letter in opposition to LR 22CA. We request that this letter be made part of the public record. The amendment to the Nebraska Constitution limits the property tax revenue raised by a political subdivision in any fiscal year to no more than three percent greater than the previous year. This limitation may be exceeded with approval from the majority of voters and does not apply to approved bonded indebtedness. Finally, the limitation does not apply to property tax revenue raised on any real growth value.

Based on definitions in the legislative resolution, the exclusion for real growth value would not offset the reduction in state aid school districts experience when a school district’s valuation increases. Often school district value increases due to price increases in the property market. The definition of real growth value in LR 22CA does not appear to include valuation growth driven by market conditions. When a school district experiences increases in valuation, state aid falls. The state aid formula presumes that school districts access the valuation growth. Placing an overlay limitation on top of the system to finance schools in Nebraska in this manner will result in a significant structural gap in funding to educate children across the state.

LR 22CA places the limitation on property tax revenue raised. This is problematic. The revenue from property taxes is paid to political subdivisions after they are collected by the county from the property owner. This process can span multiple fiscal years. In addition, the Tax Equalization Review Commission can make adjustments spanning multiple fiscal years.

School districts currently develop budgets with levy lids and spending limitations. Local constituents elect a Board of Education to develop a budget within the parameters with a focus on public transparency. Communities seek high-quality education with investments in technology, security, and programming to promote student success. A statewide cap on property taxes collected would create significant revenue shortfalls for schools resulting in increased class size, elimination of programs, and erosion of the quality of education. Nebraska is proud to have high-quality public schools.


Sincerely,


John Neal
Assistant Superintendent for Governmental Relations and General Administration