- Associated Press - Friday, February 7, 2014

LINCOLN, Neb. (AP) - Nebraska school groups and counties told a legislative committee Friday that they were concerned about a proposal to reduce the taxable value of farms and ranchland, saying the plan would leave them with potentially millions of dollars in funding shortfalls.

The Revenue Committee heard testimony on two bills relating to agriculture land valuations.

Sen. Beau McCoy of Omaha introduced a bill that would reduce agricultural land valuations over a three-year period from 75 percent to 65 percent, a move that would help farmers. Sen. Tom Hansen of North Platte introduced a bill that would provide the same reductions over a two-year period.

In his State of the State speech, Gov. Dave Heineman endorsed the proposal to lower agriculture land valuations to 65 percent.

The land valuations are tied to county budgets, the state’s school-funding formula, natural resources districts and community colleges. The school aid formula distributes state money to districts based on their needs, while accounting for what they can generate locally with property taxes. Reducing the taxable value of farm property and ranchland could shrink their tax base.

Nebraska agriculture is responsible for about 30 percent of property taxes paid, McCoy said. He said valuations have been rising at such a rapid rate it’s hard for producers to keep up.

Sen. Paul Schumacher of Columbus said the tax issue could not be looked at in isolation.

“If you reduce the valuation, don’t cut the spending and you don’t put in any state funding, doesn’t it necessarily follow that you have to increase the levy?” Schumacher asked.

McCoy said that the phase-in will give communities time to plan. The land valuation has decreased twice in the past, moving to the current 75 percent in 2006, McCoy said.

“We balance a budget, and we expect everyone to balance a budget,” McCoy said.

John Knapp testified in support of the bill on behalf of the Sarpy County Farm Bureau. The Nebraska Farm Bureau also testified in support of the bill.

Knapp, a farmer from Springfield, said he has seen a 267 percent increase in his property tax in the past decade.

He gets by, he said. “I just don’t think it’s fair.”

Renee Fry, executive director of OpenSky Policy Institute, testified against the land valuation bills.

Counties would face a $21.9 million shortfall and K-12 schools would face a $68.2 million shortfall, she said.

Mike Chipps, president of Northeast Community College, testified in a neutral position on the bill. A 10 percent land valuation change would cause the college to lose $2.5 million, he said.

The loss would cause the college to increase tuition by as much as $30 per credit hour or would require the college to make cuts.

The committee took no immediate action on the bills.


The three-year land valuation adjustment bill is LB670. The two-year bill is LB813.

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