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Report: Rural Nebraska Counties Bear Heavier Property Tax Burden

The share of total property tax paid on agricultural land in Nebraska increased from more than 18 percent in 2005 to nearly 30 percent in 2014. (Bradly Gordon/Flickr)
The share of total property tax paid on agricultural land in Nebraska increased from more than 18 percent in 2005 to nearly 30 percent in 2014. (Bradly Gordon/Flickr)
May 4, 2017

LINCOLN, Neb. -- Calls for property tax relief have dominated budget talks in Nebraska this year, and a new report examines how the tax burden has shifted more heavily onto agricultural property.

According to research from the Center for Rural Affairs, from 2005 to 2014, property tax collections accounted for nearly twice the revenue as individual income tax collections in Nebraska. In more rural counties, it was almost six times that amount.

Jordan Rasmussen, policy associate at the center, explained that while significant increases in land value are to blame, Nebraska's education funding formula also is problematic.

"They take into account what resources are available for a county,” Rasmussen said. "So if your property taxes are very high, then it looks like you have the funding in order to fully fund your schools, and therefore you lose state funding."

Statewide, the share of total property tax paid on agricultural land increased from more than 18 percent in 2005 to nearly 30 percent in 2014.

Lawmakers want to change the way agricultural land is valued under LB 461, a tax reform bill. But Rasmussen said it does not provide the substantial relief needed by property owners, in part because of an included income tax cut. In the end, she said, the proposal would decrease the amount of property taxes available to fund schools.

"There's a unified voice that we want to fund education but we also want to find property tax relief,” she said. "Maybe we need to restructure our education funding formula to make a significant tax relief benefit for people. That's, I think, where we need to be looking at."

Gov. Pete Ricketts and other supporters of LB 461 say both property and income tax reform is necessary, and claim the measure will help workers and small businesses while making Nebraska more competitive.

Mary Kuhlman, Public News Service - NE