- Associated Press - Tuesday, January 12, 2016

LINCOLN, Neb. (AP) - Nebraska Gov. Pete Ricketts and two key lawmakers unveiled a plan Tuesday designed to address the underlying causes of rising property taxes.

The proposals would tighten spending and levy limits on local governments and restrict the assessed growth in farm- and ranchland property values. They also would cap the growth rate of school district spending and the amounts that districts can stash in their cash reserves.

Property taxes are levied by school districts, counties and other local governments, but state officials have faced pressure to intervene because of soaring agricultural property values that forced landowners to pay more. Ricketts said the state sets the rules that govern how those taxes are collected.

“That really provides the opportunity for us to be able to create some structural property tax relief,” Ricketts said.

Sens. Mike Gloor of Grand Island and Kate Sullivan of Cedar Rapids will introduce the measures Thursday after Ricketts delivers his State of the State address to lawmakers. Gloor and Sullivan co-chaired a committee last year that looked for ways to reduce Nebraska’s reliance on property taxes to pay for K-12 public schools.

“This is a good-faith effort to get a handle on property tax increases,” Gloor said. “Dollars need to flow to taxpayers, not to (government) budgets.”

Sullivan said the package would allow school districts to circumvent the restrictions in many cases by submitting their proposal to voters for approval.

“Nebraskans value education. They value it a lot. And they also value the local control that goes with it,” Sullivan said. “I think these (proposals) underscore both of those things.”

One of the proposals would limit aggregate statewide property value growth to 3 percent per year for agricultural land, which would trigger an automatic boost in state aid for many schools. Ricketts declined to say how much state aid might increase until after he releases his recommended budget on Thursday.

It also would eliminate exceptions in state law that let local governments spend beyond their legal limits, and require voter approval for other spending increases.

The second proposal would restrict how quickly school districts can increase their budgets, limit how much they can build up their cash reserves and impose other constraints.

The proposals could face resistance from local governments. Larry Dix, executive director of the Nebraska Association of County Officials, said his members need taxing and spending authority and the flexibility afforded by cash reserves to deal with unexpected expenses, such as a large murder trial in a small county or a flood that wipes out county bridges.

Dix said any effort to impose a ceiling on valuation growth should also include a floor to protect counties against sudden declines in land value.

“County boards as a group - the last thing they want to do is raise property taxes,” Dix said. “But you’ve got to be smart about this.”

The leader of a Nebraska tax-policy think tank expressed some reservations, but said her group had not yet studied the plan closely.

“We do know the proposals would trigger a significant increase in state support for K-12 education, which we would support so long as the Legislature is willing to fully fund it,” said Renee Fry, executive director of the OpenSky Policy Institute.

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