’ll start this blog post with a quick nod to my Omaha Public Schools education and a thank you to a teacher from my past. Miss Tanner at Morton Junior High School didn’t give up on me, even though my fourteen-year-old brain could not, for the life of me, understand why letters and numbers belonged in the same equation. She stuck with me and started me down an educational path that involved trig, calc, and yes, a lot of algebra. Let me throw a few numbers and letters at you to prompt some thoughts on property taxes.
Our property taxes are calculated by multiplying the assessed valuation (A), by the levy rate (B), to arrive at the dollar amount that is to be paid (C).
Valuation x Levy = Your Tax Bill
This would be a seventh-grade algebra equation, except that we need to understand that the math can—and in this case, should—be done backward. I believe that “C” is the controlling factor in the equation, not the result of a multiplication problem. “C” represents the cost of doing business for your school districts, your county, your city, your NRD, and numerous other taxing entities (all of which are managed by locally elected boards and are not state-controlled, by the way). If “C” is controlled or limited, possibly through a hard spending lid or cap, then the valuations and levies may be adjusted downward accordingly.
If this were the case, valuations would not need to be manually or artificially reduced to limit property tax collections. Valuations could reflect the actual, true value of a property, and the levies would instead need to be lowered to make the equation work.
I often hear folks, even my colleagues in the Legislature, lament the growth in property values as the nemesis of every property taxpayer in Nebraska. While your assessed value is certainly one factor in the equation, it should not be the controlling one.
This past session, the Legislature passed my Revenue Committee bill, LB 803, which mandates that if assessed values go up in a district, then the levy shall be reduced by the same percentage. For example, if property in your school district increased in value by ten percent, then the levies must be reduced by ten percent, resulting in a zero-dollar impact on your property tax bill. The school district, county, and city do have the option to override this requirement with a supermajority vote, and citizens may also approve an override through a vote of the people. Even so, this provides significant additional protection against runaway valuations and windfall budget gains for taxing authorities.
Also in LB 803 is a requirement to provide your blue or pink postcard notices much earlier. These used to arrive just days before a budget hearing but next year, those cards will come in July, giving you some sixty days or so to torment—I mean, reach out to—your board members and stress to them the importance of not overriding the limits.
In keeping with my belief that the best way to control property taxes is by controlling or limiting spending, I am bringing a hard-cap bill in January that will allow for a smaller rate of growth while requiring a more thoughtful and limited process for overriding those limits. I met with the interested parties during session last winter and have recently reopened those discussions to ensure that we are all on the same page when the session begins.
This was a lot to cover in a short blog. If you had trouble with any of this, reach out to me at bvg4ne@gmail.com, or find a middle school student and let them brush you up on the new math. Now that will blow your mind!