(The Center Square) – A bill to provide tax relief to farmers on school bond issues has advanced in the Nebraska Legislature.
Under Legislative Bill 2 (LB 2), sponsored by Sen. Tom Briese, R-Albion, agricultural land would be considered at 50% of actual value instead of the current 75% for bond debt, which would give farmers a slight tax break.
“It helps to balance responsibility between ag landowners and residential and commercial property owners when it comes to future school bond issues,” Bruce Rieker, vice president of Governmental Relations for the Nebraska Farm Bureau, told The Center Square. “When the communities vote in a capital bond issue, there is a pretty heavy load on the ag producers.”
It’s hard to project how much LB2 would save farmers in property taxes since the legislation applies only to future school-bond issues, he said.
“It will be significant,” Rieker said. “But in the much bigger picture, it will help us reform the way we fund education. We’re not talking about cutting education. We’re talking about how we fund it.”
By some estimates, 70% of school funding in Nebraska is from property taxes, compared to 40% nationally. Nebraska has one of the highest school property taxes in the nation, Rieker said.
“Depending on whose study you look at, we’re definitely in the top one, two or three,” Rieker said.
Citizens can participate in school bond issue elections whether or not they own property, giving a farmer with several hundred acres the same weight as the owner of a small house or a renter, Rieker said.
If LB2 passes, there would be two valuations on a property, he said.
“There would be one for the other political subdivisions that rely on property taxes; the counties, natural resource districts, community colleges,” Rieker said. “For all of those purposes, the ag land would still be valued at 75% for tax purposes. But then there will be a separate calculation for any school bond issues moving forward, which would be 50% for agricultural property.”
A farmer’s house as well as outbuildings such as barns would still be valued at 100% for tax purposes, as all residential and commercial property in Nebraska is, Rieker said.
The bill has cleared the second round of debate and will move forward for a final reading.