- Associated Press - Tuesday, April 18, 2017

LINCOLN, Neb. (AP) - A bill that would reduce Nebraska property taxes appears to have stalled amid concerns from urban state senators and some farm and school groups.

Supporters said Tuesday that they don’t believe the measure has enough support to overcome a filibuster. Lawmakers debated the bill for roughly three hours but stopped before reaching a vote. The bill is unlikely to get debated again this year unless backers can show they have the 33 votes required to force a vote on it.

Sen. Mike Groene of North Platte, the bill’s sponsor, said the measure would have restored equity to a system many farmers view as unfair. Taxes on agricultural land have soared over the last decade because of rising property values, even as farm and ranch incomes have declined with falling commodity prices. And many rural schools have lost access to state equalization aid because property values within their boundaries have risen so high.

“The fact is, property taxpayers do shoulder the greatest burden by far,” Groene said.

Urban senators opposed the bill because it could have increased costs for homeowners in their districts while shifting money away from larger school systems.

The bill would have lowered the state’s school property tax levy cap from $1.05 per $100 of taxable value to 98.7 cents per $100. Schools that saw a reduction in state equalization aid could have temporarily increased the levy to $1 if they hold a public hearing and a two-thirds majority of the school board approved it. Property taxes could have accounted for no more than 55 percent of a district’s overall funding.

In exchange, schools would have seen an increase in state aid from the state’s $224 million property tax credit fund. Money from the fund is used to offset some of what all property owners have to pay, but farm and ranch groups have complained that it isn’t enough. Some school administrators have raised concerns because state aid is generally less stable than property tax revenue.

Sen. Curt Friesen, a farmer from Henderson, said the bill would have provided additional state aid to schools that don’t currently qualify for state equalization funding. Friensen said he owns land parcels in four school districts but can only vote in one.

“I don’t think our funding is fair and equitable,” he said.

Sen. Dan Hughes of Venango, a farmer, said producers in his rural southwestern district are retiring or quitting because property taxes have made their operations unsustainable.

“There’s a world of hurt coming, and we need to protect Nebraska’s largest industry,” he said.

Opponents argued that the bill could have hurt schools. Sen. Roy Baker of Lincoln, a former superintendent, argued that local school boards should have the flexibility to control their budgets and noted that many rural districts face a teacher shortage.

A coalition of farm groups said it supports the concept of capping property taxes, but objected to the bill’s use of money from the property tax credit fund to pay for the increase in school aid. The coalition, led by the Nebraska Farm Bureau Federation, has called for lawmakers to find new revenue sources such as a sales tax increase to help lower property taxes.

The bill “is little more than status quo for property taxpayers in terms of additional relief,” said Dennis Fujan, president of the Nebraska Soybean Association.

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Follow Grant Schulte on Twitter at https://twitter.com/GrantSchulte

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