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From the Superintendent's Desk...

We have recently been blessed with several nice spring rains.  The grass is greening up.  The birds are chirping, and the fish are starting to bite. Spring has sprung in Nebraska.  The other thing that has been springing up in Nebraska are all kinds of legislative proposals addressing the state’s property tax issue.

One such bill is LB640.  This bill has been scheduled for General File debate on April 18.  Opinions of this bill vary widely.  Some proponents support it as a true and valid solution to curbing the state’s overreliance on property tax to fund public education.  Opponents of the bills are concerned about how school districts will recover the lost property tax revenue taken away by the bill.

If approved, LB640 would go into effect for the 2018-19 school year.  It proposes using money from the “Property Tax Credit Fund” to put more money into the state aid formula, known as TEEOSA.  In theory, if more money was put into the state aid formula, and that money was then channeled back to school districts in the form of state aid, school districts could reduce their property tax requests.  The belief is that if more money is directed to school districts in the form of state aid, the property tax requests in those school districts would decrease.

The Nebraska Department of Education creates models to estimate the fiscal impact that such changes to the state aid formula will have on each school district throughout the state.  Under the proposed language in LB640, Ravenna Public Schools would be provided with $903,980 in state aid, with $866,831 of that being provided by “School District Property Tax Relief” funds.  In theory, Ravenna Public Schools would then be able to reduce their tax request by a corresponding amount.  The tax request for Ravenna Public Schools for the 2016-17 school year is $5,822,621. 

LB640 also lowers the maximum levy a school district can tax from the current $1.05 to $0.987.  Ravenna Public Schools has not taxed at the current maximum levy rate of a $1.05 for several years.  The levy rate for 2016-17 school year for Ravenna Public Schools for the general fund is $0.849.  The bill also limits property taxes to not exceed 55% of the total school district’s revenues.  According to correspondences from Senator Groene’s office, this portion of the bill “…eliminates the effect of artificial valuation increases on local school funding…”

Providing additional funding for school districts through the state aid formula, lowering the maximum levy limit a school can tax, and setting limits on the amount of taxes that can comprise the school district’s budget are all realistic and reasonable steps towards reducing property taxes.  However, because of the way the language in the bill is written, there is a high degree of uncertainty of its ability to truly reduce property taxes in the long run.  According to a correspondence from Senator Groene’s office, “…Unequalized districts [those school districts receiving no state aid through TEEOSA] would revert back to property taxes if the Property Tax Credit Fund is not funded…”  This bill essentially raises another tax source to attempt to facilitate property tax reduction.  That plan will only work if the other tax source, in this instance the Property Tax Credit Fund, is funded at a level that allows for the intended property tax relief.

The exact intent and application of this proposed legislation will become clearer, as they being to debate the bill on April 18th.  It is certainly a bill to keep watch over and see what springs up as a result of the debate.


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