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Dave Aiken, Ph.D.Nebraska Extension Agricultural Law Specialist
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2020 Property Tax Update
J. David Aiken, UNL Ag Law Specialist
402-472-1848; [email protected]
Women Managing Agland Conference
Nebraska Innovation Campus
December 2019
Nebraska property tax update
State & local taxing & spending overview
Agland property tax issues
2019-2020 legislative proposals & prospects
Property tax relief initiative—LR3CA
“35% solution”; petition active for 2020 ballot
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Dave Aiken, Ph.D.Nebraska Extension Agricultural Law Specialist
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Neb state & local taxes FY2015
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State & local
% of total State % Local %
Total taxescollected
$9.6 billion --- 53% 47%
Property taxes
$3.6 billion 38% --- 100%
Sales tax $2.8 billion 29% 84% 16%
Income tax $2.5 billion 26% 100% ---
Other taxes $0.6 billion 7% 30% 70%
State & local taxes, con’t
State taxes are 53% of total state-local tax collections
Sales taxes = 45% of total state taxes
Income taxes = 51% of total state taxes
Other taxes = 4% of total state taxes
Local taxes are 47% of total state-local tax collections
Property taxes = 80% of total local taxes
Sales taxes = 10% of total local taxes
Other taxes = 10% of total local taxes
60% of property taxes go for k-12 school funding
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Dave Aiken, Ph.D.Nebraska Extension Agricultural Law Specialist
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Nebraska state tax & school funding rankings
Tax Foundation 2019 business climate study:
Overall tax burden: 24/50 (1 is lowest burden)
Income taxes 26/50 (1 is lowest tax)--middle
Sales taxes 9/50 (1 is lowest tax)--low
Property taxes 40/50 (1 is lowest tax)--high
US census bureau school finance 2014-15 data
State k-12 funding 48/50 (1 is highest funding)
Local k-12 funding 2/50 (1 is highest funding)
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Dave Aiken, Ph.D.Nebraska Extension Agricultural Law Specialist
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State general fund spending
General Fund Appropriations, FY 2016-17
Total state k-12 funding $1,308 million 29%
Medicaid & CHIP $856 million 19%
Other state aid to individuals (HHS) $803 million 18%
Higher education NU; state & community colleges $730 million 16%
Law enforcement & public safety $501 million 11%
Other state agencies $160 million 4%
State aid to local governments (proptax credits) $98 million 2%
Total $4,456 million
Source: 2018 General Fund Functional Summary
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Local property tax spending
Property taxes levied in Nebraska by:
60% School districts 1.9% NRDs
16% Counties 1.3% Rural fire districts
10% Cities & villages 0.9% ESUs
5.5% Community colleges 0.4% Townships
4% Miscellaneous districts (SIDsetc)
100% total
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Dave Aiken, Ph.D.Nebraska Extension Agricultural Law Specialist
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Ag property tax issues
Nebraska property taxes on agricultural land are 146% of the US average 1950-2017 as a percentage of net ag income—so very high Neb agland property taxes
2007: Neb net farm income $2 billion, property taxes paid $606 million, 20.6% of net farm income
2017: Neb net farm income $2.7 billion, property taxes paid $1.3 billion, 48% of net farm income
Agland property tax assessments (& due in the following year): 2018: $1.18 billion; 2017: $1.2 billion; 2016: $1.2 billion; 2015: $1.16 billion; 2014: $1 billion; 2013: $893 million; 2012: $769 million.
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Dave Aiken, Ph.D.Nebraska Extension Agricultural Law Specialist
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LB829 — “30% solution”
Property tax initiative petition--would have been on 2018 ballot
Would have provided refundable state income tax credits for 50% of k-12 property taxes (about 30% prop tax paid)
Property value x property tax rate x 30%
$150,000 house x 1.6% x .3 = $720 refund
$2.5 million farm x 1.2% x .3 = $9,000 refund
Would have cost about $1.1 billion, 25% of state GF budget
Zero out state agencies budget & cut NU budget 50% = $1.15 billion [Gov Ricketts]
Or else increase sales tax 64%, income tax 39% or sales & income taxes 24%.
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Dave Aiken, Ph.D.Nebraska Extension Agricultural Law Specialist
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Sales tax options
Applying sales tax to untaxed services possible source of property tax relief funding
Avoid sales tax on business expenditures (“intermediate goods”) to not make Neb products more expensive
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$198 million: physicians $194 million: non-profit purchases $183 million: motor fuels$166 million: groceries $164 million: Rx’s & Rx home health care equip[total: $741 million] $63 million: legal services$41 million: dentists$33 million: real estate agents $20 million: other outpatient services $19 million: motor vehicle cleaning & repair$16 million: pet related services $13 million: home repair etc services
$11 million: personal services (hair, nail care)$8.6 million: storage & moving services $7 million: accounting services$7 million: chiropractors $6 million: investment advice $4.5 million: mental health counselors$4.4 million: optometrists$4 million: other personal services (weight loss, tattoo, funeral & cremation, etc) $2.6 million: dry-cleaning & clothing repair $2 million: travel agencies $1 million: taxi, limo & other transport services About $1.17 billion in total
2019 major property tax/school funding bills
Governor: const amdt to limit proptax spending 3%/year
proptax credit fund increase $51 million/year
School aid increase $50 million/year
Capitalized earning test for agland valuation
LR3CA (Erdman): const amdt to give refundable state income tax credits for 35% of property tax payments
Similar to LB829 “30% solution”
Several other bills to broaden sales taxes, change school aid formula, etc.
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Dave Aiken, Ph.D.Nebraska Extension Agricultural Law Specialist
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2019 bills, con’t
Rev Comm chair Sen. Lineham (Elkhorn) LB289 (late)
Broadened sales taxes & raised rate 0.75% (to 6.25%)
Increase state aid to cover 33% of every student’s cost
Limit k12 spending to inflation + enrollment increases
Lots of sales tax pushback;
IMO urban schools did not like state aid changes
Proptax relief supporters could not break filibuster
Some LB289 supporters voted against LB720, state econ dev program rewrite to link the two bills in 2020 session
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2020 prospects
Revenue committee has met with Gov Ricketts during interim. Best
guess (based on newspaper accounts):
No or few sales tax changes & no sales tax rate increase
Smaller property tax relief—targeted to ag property tax reduction
Ag land to be taxed at 55% actual value for k-12 property taxes
(down from the current 75%)
Around 16% avg reduction in total ag property taxes
Urban & commercial property taxes to be reduced in future years
Property tax relief funded by recent (temporary) increase in state
revenues
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Dave Aiken, Ph.D.Nebraska Extension Agricultural Law Specialist
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“35% solution”
LB3CA: rewrite of LB829
Would require refundable state income tax credits for 35% of taxpayer’s
property taxes
$150,000 house x 1.6% x .35 = $840 refund
$2.5 million farm x 1.2% x .35 = $10,500 refund
If approved by voters, refunds would cost ~33% state budget
If no state tax increase, cut state spending 33%
17% sales & income tax increase would cover 50% of refunds
33% sales & income tax increases would cover all refunds
Hopefully Unicameral & Gov don’t want to deal with this, will enact “grand
bargain” compromise & oppose LR3CA if it gets on the ballot
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agecon.unl.edu/cornhuskereconomics
Cornhusker Economics
It is the policy of the University of Nebraska–Lincoln not to discriminate based upon age, race, ethnicity, color, national origin, gender-identity, sex, pregnancy, disability, sexual orientation, genetic information, veteran’s status, marital status, religion or political affiliation.
Revised March 29, 2019
2019 Nebraska Property Tax-School Funding Issues
Nebraska agricultural property taxes are among the highest in the United States. Over the last three years, Nebraska farmers and ranchers have paid nearly 31 percent of their net farm income as proper-ty taxes (47 percent in 2017). When state and federal taxes are factored in, this represents an effective tax rate of more than 50 percent (over 60 percent in 2017). While no one particularly enjoys paying prop-erty taxes (or any other tax), property taxes are espe-cially burdensome for Nebraska farmers and ranch-ers. The proposed 2020 constitutional amendment to provide property tax relief would require dramatic state spending cuts, equally dramatic state sales and income tax increases, or both. This newsletter pro-vides an introduction to the role of property taxes in financing state and local government in Nebraska as well as K-12 education. We then examine some of the major property tax relief proposals and how they might impact taxing and spending in Nebraska. Nebraska ag land property tax crunch. Nebraska property taxes on agricultural land as a percentage of net farm income are 146 percent of the United States average (1950-2017 data). This means that for every $1.00 of agricultural income that United States farm-ers and ranchers pay on average for property tax, Nebraska farmers and ranchers pay $1.46, or almost one and a half times as much. So Nebraska agricul-tural property taxes are significantly higher than what most United States farmers and ranchers pay. And it has gotten worse in recent years: the 20- year average is 150 percent, the 10-year average is 147 percent, the 5-year average is 164 percent and the 3-year average is 188 percent.
Market ReportYear Ago
4 Wks Ago
2-22-19
Livestock and Products, Weekly AverageNebraska Slaughter Steers, 35-65% Choice, Live Weight. . . . . . . 125.41 122.18 126.50Nebraska Feeder Steers, Med. & Large Frame, 550-600 lb. . . . . 200.00 178.48 178.24Nebraska Feeder Steers, Med. & Large Frame 750-800 lb. . .. . 156.82 149.12 145.83Choice Boxed Beef, 600-750 lb. Carcass. . . . . . . . . . . . . . 216.53 216.71 217.72Western Corn Belt Base Hog Price Carcass, Negotiated . . . . . . . . . . . . . .. 62.74 50.91 45.67Pork Carcass Cutout, 185 lb. Carcass 51-52% Lean. . . . . . . . . . . . . . . . . . . . 78.42 66.98 58.78Slaughter Lambs, wooled and shorn, 135-165 lb. National. . . . . . . 139.07 NA 133.16National Carcass Lamb Cutout FOB. . . . . . . . . . . . . . . . . . . . . . . . . . . 369.76 389.33 377.13
Crops, Daily Spot PricesWheat, No. 1, H.W. Imperial, bu. . . . . . . . . . . . . . . . . . . . . 4.14 4.59 3.97Corn, No. 2, Yellow Columbus, bu. . . . . . . . . . . . . . . . 3.44 3.52 3.49Soybeans, No. 1, Yellow Columbus, bu. . . . . . . . . . . . . .. . . 9.50 8.17 8.08Grain Sorghum, No.2, Yellow Dorchester, cwt. . . . . . . . . . . . . . . . . . 5.65 5.71 5.55Oats, No. 2, Heavy Minneapolis, Mn, bu. . . . . . . . . . . . . . . 2.93 3.25 3.19
FeedAlfalfa, Large Square Bales, Good to Premium, RFV 160-185 Northeast Nebraska, ton. . . . . . . . . . . * 165.00 177.00Alfalfa, Large Rounds, Good Platte Valley, ton. . . . . . . . . . . . . . . . . 90.00 105.00 105.00Grass Hay, Large Rounds, Good Nebraska, ton. . . . . . . . . . . . . . .. . . . * 87.50 85.00Dried Distillers Grains, 10% Moisture Nebraska Average. . . . . . . . . . . . . . . . 144.00 147.00 140.00Wet Distillers Grains, 65-70% Moisture Nebraska Average. . . . . . . . . . . . . . . . 48.50 56.00 51.00
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be on the November 2020 ballot if property taxes are not addressed by then. Below are estimates of how the “property tax refund” would have been calculated for representative residen-tial and agricultural taxpayers if the 2018 property tax relief petition had been approved by voters. The basic formula is taxable property value times property tax rate times 30 percent (half of the 60 percent of property taxes that went for schools). Rural property tax rates are lower because they do not include city property taxes.
$150,000 house x 1.6% x .3 = $720 refund
$2.5 million farm x 1.2% x .3 = $9000 refund
If the 2018 property tax petition had been on the No-vember 2018 ballot and enacted by voters, the Governor and state legislators would now be debating how to pay for the $1.1 billion of property tax relief. Likely sharp state spending cuts and steep sales and income tax in-creases would have been needed to deal with the $1.1 billion state budget gap. To help bring this into focus, Governor Rickets correctly observed that in order to close the $1.1 billion budget gap, state spending could be reduced the needed 25 percent by shutting down all state agencies and also by cutting the University of Ne-braska state budget in half. If the budget gap were closed by increased taxes alone (no state spending cuts), sales and income taxes both would have increased about 24 percent. There is no magic way to accomplish property tax relief of this magnitude without either in-creasing other taxes substantially, substantially reduc-ing state and local spending or both.
State spending overview. State aid to K-12 education is $1.3 billion, 29 percent of Nebraska’s General Fund an-nual spending; the largest single state expenditure cate-gory. Even though Nebraska is low relative to most oth-er states regarding the state’s share of total public school costs, state school aid is nonetheless the single largest element in the state budget. The remaining state budget categories and amounts are:
Medicaid-CHIP $856 million, 19% State aid to individuals $803 million, 18% Higher education $730 million, 16% Law enforcement/public safety $501, million ,
11% Other state agencies $160 million, 4% State aid to local governments $98 million, 2% Total: $4.456 billion
State school aid distribution. How state aid is distrib-uted to school districts across the state affects local property taxes. There are two principal components to the Nebraska state school aid distribution formu-la: equalization aid and foundation aid. Equalization
Role of property taxes in Nebraska. Property taxes are the single largest tax paid in Nebraska, accounting for 38 percent of total state and local tax collections. Sales taxes are 29 percent of total taxes, and income taxes are 26 percent. Sixty percent of property taxes go to K-12 education funding. All property taxes fund local gov-ernment--cities, counties, and local school districts. All income taxes and 84 percent of sales taxes are used to fund our state government. Balancing tax sources? One public finance a pproach suggests that the tax load is fairest if it is evenly spread across the types of taxes collected. This suggests that the amount of revenue raised by property taxes, sales taxes and income taxes should be roughly about the same. If Nebraska property taxes, sales tax and income taxes were equalized as sources of state and local revenue, property taxes would need to be reduced over $600 million, sales taxes would go up about $200 million and income taxes would increase around $400 million. While maintaining exactly equal shares among the different taxes would be impractical, moving towards a more equal shares approach would probably strike many taxpayers as being fairer. How high are Nebraska taxes? One way to evaluate this is to compare Nebraska’s taxes with those of other states. In a national comparison, Nebraska property taxes are the 10th highest in the United States; sales tax-es are the 9th lowest, income taxes are in the middle (26th out of 50) and the overall tax burden is also in the middle (24th out of 50) (Tax Foundation 2019 business climate study). One reason Nebraska sales taxes are relatively low is that we do not tax services, while many other states do. How about school taxes? According to United States Census Bureau statistics (2014-15 data), Nebraska state school aid is the 2nd lowest in the United States, while the local share of K-12 school spending (property taxes) is the second highest. This suggests that property taxes may be bearing too large a share of public educa-tion costs and that some of these costs should be shifted onto sales and income taxes.
2018 property tax relief petition. The 2 018 p roperty t ax relief petition would have given ag and residential property owners refundable state income tax credits for 50 percent of their property taxes that went for K-12 education, or about 30 percent on average. Paying for the property tax credits would have cost $1.1 billion or 25 percent of the state general fund budget. The 2 018 property tax relief initiative would have given many homeowners several hundred dollars of state income tax credits and ag property owners state income tax credits of several thousand dollars. An expanded ver-sion of the 2018 property tax relief petition will likely
aid refers to state aid to school districts with lower per-pupil property tax valuation. This is also called “need-based” aid. Foundation aid is equal to per-pupil state aid across the board, without regard to the amount of per-pupil property tax valuation. Currently, with high ag land values across the state, 85 percent of state aid goes to non-agricultural areas and 15 percent is distributed across the board to all school districts. Two-thirds of Nebraska school districts (largely rural) receive little or no state aid. Some state senators would like to rebalance the state school aid formula so that 50 percent is need based and 50 percent is across the board. This state aid shift would move about a third of the current state school aid away from urban schools to rural schools. Spending cuts or tax shifts? One reason we have not achieved property tax relief in Nebraska is due partly to different political philosophies on how best to accomplish it: through spending cuts or through a tax shift? The spend-ing cuts approach would pay for property tax cuts by cutting state and local spending. The tax shift approach would pay for property tax cuts by expanding the Nebraska sales tax base to include services and using that new revenue for property tax relief. This philosophical stalemate has result-ed in property tax policy gridlock. One reason Nebraska sales taxes are relatively low compared to other states is that we don’t tax services and many other states do. This type of tax shift may be the only realistic way to pay for the level of property tax relief that could head off a 2020 property tax relief ballot petition. But increasing sales taxes has histori-cally been opposed by business and consumer interests, who are likely to continue their opposition. So there is no easy answer here.
Political economics. Pretend you are a political con-sultant to a group seeking reduced property taxes. How would you advise your clients? If the objective is to find--say--$600 million dollars in property tax re-lief, your strategy would likely include a state school aid shift and a tax shift. The state school aid shift would change state aid distribution from 85 percent equalization-15 percent across the board to something like 50 percent equalization-50 percent across the board. This would move $300-350 million in state aid away from urban schools to rural schools. The tax shift would expand sales taxes to untaxed goods and services and use the increased revenue for property tax relief. Current sales tax exemptions, and the amounts of sales tax revenue each exemption would generate, if not exempted, are listed below.
A quick review of these figures suggests that the larg-est sales tax exemptions are among the most popular (medical expenses, gasoline, groceries), while more of the less popular exemptions (perhaps junk food, hair-cuts and beauty salons, weight loss clinics, dry clean-ing, etc.) would yield much less sales tax revenue. Eve-ry sales tax exemption has its defenders who would likely oppose losing their exemption to help fund property tax relief efforts. Other options. Consider reforming business incentive programs ($360 million in 2016); increase state in-come taxes (currently about $400 million below what roughly equal revenue from property, sales and in-come taxes would be).
$198 million: physician services $194 million: purchases by non-profits $183 million: motor fuels $166 million: groceries $164 million: Rx, home health care Rx $63 million: legal services $41 million: dentist services $33 million: real estate agent services $20 million: other outpatient services $19 million: motor vehicle cleaning, repairs $16 million: pet services $13 million: home repair etc services $11 million: personal grooming services
$8.6 million: moving and storage services $7 million: accounting services $7 million: chiropractor services $6 million: investment advice $4.5 million: mental health services $4.4 million: optometrist services $4 million: other personal services (weight
loss, tattoos, funeral and cremation, etc.) $2.6 million: dry cleaning & clothing repair $2 million: travel agencies $1 million: transportation services (taxis, limo
rentals, etc.) About $1.2 billion in total
Major 2019 Bills
Property tax relief will be a high profile issue in the 2019-2020 legislative sessions. Some tax shift opponents have been term-limited out of the Unicameral, although Gover-nor Ricketts is a tax shift opponent. We will take a quick look at some of the major property tax/school funding pro-posals before commenting on the obstacles to property tax relief in the 2019-2020 sessions, as well as the potential im-pact of enacting the 2020 property tax relief ballot initiative.
LR3CA, introduced by Sen. Steven Erdman (Bayard), would amend the Nebraska Constitution to establish re-fundable state income tax credits of 35 percent of the tax-payers’ total property taxes paid. LR3 would likely cost around $1.4 billion, 31 percent of the state General Fund budget. LR3 would create a major state budget crisis to fund through state spending cuts and tax increases. LR3 is what the Governor and state senators have two years to try to avoid by adopting significant property tax relief before the November 2020 general election.
If LR3 were enacted, this is how taxpayers’ “property tax refunds” would be calculated:
$150,000 house x 1.6% x .35 = $840 refund $2.5 million farm x 1.2% x .35 = $10,500 refund The Governor’s plan includes (1) increasing state property tax credits $51 million annually; (2) adopting a proposed constitutional amendment to limit property tax increases to 3 percent per year; (3) adopting an income capitalization rate for agricultural land to lower property tax valuations, and (4) increasing state school aid around $52 million per year. LB314, introduced by Sen. Tom Briese (Albion) was devel-oped by Nebraskans United, which includes agricultural, education and public health representatives. LB314 would impose sales taxes on candy, pop, bottled water, home re-modeling, haircuts, and auto repairs. The bill would also increase the state sales tax rate one half cent, increase ciga-rette taxes $1.50/pack, triple beer and alcohol taxes, and remove most state income tax itemized deductions (but not for medical expenses). LB314 would provide $510 million in property tax relief, and would increase state school aid by $236 million. LB314 is the only major proposal with an urban senator co-sponsor, indicating at least some urban support for the bill. LB695, introduced by Sen. Mike Groene (North Platte), would change the state school aid distribution formula to guarantee $3500 of state aid per pupil to every school dis-trict. LB497, introduced by Sen. Curt Friesen (Henderson), would give every school district 50 percent state aid. The bill would lower ag land valuation for school taxation from 75 percent to 40 percent over time and would limit school
spending increases. LB497 would provide $523 million in new revenue, including sales taxes on groceries, house cleaning and vehicle repairs, as well as increased taxes on tobacco and alcohol. Other tax and school funding bills have been pro-posed. The bills will be heard in committee in Febru-ary and March. The bills making it out of committee should reach the floor sometime in late March or early April. The floor debates will be robust, contentious, and headline news for as long as they continue. Discussion. Senators Briese and Friesen have both proposed controversial bills that would provide sub-stantial property tax relief at a level that would have a fighting chance to head off a 2020 property tax relief ballot initiative. Their bills also provide funding for the property tax relief through (1) a state school aid shift and (2) a tax shift onto sales taxes. One or both bills are likely to be advanced out of committee to floor debate in March or April. So there should be enough time to give these important property tax re-lief proposals a meaningful legislative debate. It will take several urban votes to enact any property tax relief proposal: 33 votes are needed to overcome a legislative filibuster, and 30 votes are needed to over-ride a gubernatorial veto. To obtain this urban sup-port, some of the state aid lost by urban districts in any state aid shift will need to be made up at least in part. The LR3 property tax relief initiative petition basically gives the Unicameral and Governor this year and next year to adopt a property tax relief program. If they don’t, they will leave the door open for voters to give themselves a 35 percent property tax cut, something many voters would be eager to do. And Governor Ricketts and the 2021 Unicameral would have a his-toric state budget crisis to solve. Property tax reform will not be easy or straightfor-ward. A major issue is whether consumers are willing to pay higher sales taxes in order to receive property tax relief. Some will and some won’t. It would be best to have school funding issues resolved in the Unicam-eral instead of at the ballot box. But if the Unicameral remains deadlocked on this issue, voters may choose to have the final word.
J. David Aiken, UNL-IANR Water & Ag Law Specialist
402-472-1848; [email protected]
agecon.unl.edu/cornhuskereconomics
Cornhusker Economics
It is the policy of the University of Nebraska–Lincoln not to discriminate based upon age, race, ethnicity, color, national origin, gender-identity, sex, pregnancy, disability, sexual orientation, genetic information, veteran’s status, marital status, religion or political affiliation.
July 24, 2019
2019 Nebraska Property Tax Issues
Nebraska property taxes are the tenth highest in the United States, sales taxes are the ninth low-est, and both income taxes and total state taxes are in the middle. Property taxes account for 38% of total state and local tax collections in Ne-braska, the highest of any tax. Sales taxes are 29% of total tax collections, and income taxes are 26%. If property taxes, sales taxes and in-come taxes were equalized as sources of state and local revenue, property taxes would need to be reduced over $600 million. Sixty percent of property taxes go to K-12 edu-cation funding. Nebraska state school aid is the second lowest in the United States, while the lo-cal share of K-12 school spending is the second highest. Nebraska property taxes on agricultural land historically have been high in Nebraska relative to other states as a percent of net farm income. Since 1950, Nebraska property taxes on agricul-tural land are 46% higher than the United States average. In 2017 agricultural property taxes paid were 47% of Nebraska net farm income. When other taxes are taken into account this means that most Nebraska farmers or ranchers were paying 50-60% of their net farm income in taxes. This agricultural property tax crisis has led to two efforts to place property tax relief proposals on the ballot. The 2018 initiative would have giv-en property taxpayers a refundable state income tax credit of 30% of property tax payments, effectively reducing property taxes 30%. It also would have cost the state treasury $1.1 billion,
Market Report Year Ago
4 Wks Ago 7-19-19
Livestock and Products, Weekly Average Nebraska Slaughter Steers, 35-65% Choice, Live Weight. . . . . . . * 114.00 112.40 Nebraska Feeder Steers, Med. & Large Frame, 550-600 lb. . . . . 160.00 170.33 173.66 Nebraska Feeder Steers, Med. & Large Frame 750-800 lb. . .. . 162.05 150.28 151.70 Choice Boxed Beef, 600-750 lb. Carcass. . . . . . . . . . . . . . 204.32 222.11 213.11 Western Corn Belt Base Hog Price Carcass, Negotiated . . . . . . . . . . . . . .. 66.68 * * Pork Carcass Cutout, 185 lb. Carcass 51-52% Lean. . . . . . . . . . . . . . . . . . . . 81.14 81.75 76.40 Slaughter Lambs, wooled and shorn, 135-165 lb. National. . . . . . . 162.44 163.93 160.86 National Carcass Lamb Cutout FOB. . . . . . . . . . . . . . . . . . . . . . . . . . . 383.96 392.83 405.55
Crops, Daily Spot Prices Wheat, No. 1, H.W. Imperial, bu. . . . . . . . . . . . . . . . . . . . . 461 4.26 3.89 Corn, No. 2, Yellow Columbus, bu. . . . . . . . . . . . . . . . 3.44 4.63 4.23 Soybeans, No. 1, Yellow Columbus, bu. . . . . . . . . . . . . .. . . 7.78 8.14 8.02 Grain Sorghum, No.2, Yellow Dorchester, cwt. . . . . . . . . . . . . . . . . . 5.31 7.14 6.46 Oats, No. 2, Heavy Minneapolis, Mn, bu. . . . . . . . . . . . . . . 2.82 3.23 3.06
Feed Alfalfa, Large Square Bales, Good to Premium, RFV 160-185 Northeast Nebraska, ton. . . . . . . . . . . 180.00 * 172.75 Alfalfa, Large Rounds, Good Platte Valley, ton. . . . . . . . . . . . . . . . . 110.00 110.00
125.00 delivered
Grass Hay, Large Rounds, Good Nebraska, ton. . . . . . . . . . . . . . .. . . . 100.00 97.50 100.00 Dried Distillers Grains, 10% Moisture Nebraska Average. . . . . . . . . . . . . . . . 105.00 133.50 149.50 Wet Distillers Grains, 65-70% Moisture Nebraska Average. . . . . . . . . . . . . . . . 36.83 50.00 43.25
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to end a legislative filibuster. The proposal would have provided between $350-$500 million in prop-erty tax relief. Rural senators did manage to tie passage of proper-ty tax reform with reform of state economic devel-opment programs. The economic development program overhaul–LB720–was stalled when a handful of rural senators withdrew their support after the property tax relief proposal was filibus-tered. This political hardball does provide an im-proved chance that if enough common ground can be negotiated before next January, both LB289 and LB720 could be enacted early in the 2020 legislative session. There are many challenges and uncertainties ahead. Urban senators may feel their constituents are not being treated fairly under LB289–urban taxpayers will pay much of the higher sales taxes paying for property tax relief, but most of the in-creased school aid and property tax relief will go to rural areas. School districts across the state will want to evaluate the impact to them of modifying the complex state school aid formula. Counties in flooded areas may need state financial assistance in rebuilding damaged roads and bridges. Agricultur-al land property values could continue their gradu-al decline and be joined by associated declines in agricultural land property taxes assessed and paid (which most agricultural landowners would wel-come). The Governor might veto LB289 and the legislative veto override attempt might fall short. The proposed 35% solution may be on the 2020 ballot and voters could find it more attractive than LB289. The way ahead is anything but clear. But significant progress was made in 2019--LB289 ap-peared to have the support of at least 28 senators, which is something to build on. Stay tuned, and hold on to your hat—it is likely to be a very bumpy ride.
J. David Aiken, Professor Water & Agricultural Law Specialist
Department of Agricultural Economics University of Nebraska-Lincoln
402-472-1848 [email protected]
25% of the General Fund budget, and would have forced sharp cuts in state spending as well as major in-creases in state sales and income taxes. The 2018 initiative campaign was called off April 27, 2018, and did not appear on the 2018 ballot. However, property tax reduction groups are attempting to place a new version on the 2020 ballot, called the “35% solu-tion.” This proposal would give property tax payers a refundable state income credit of 35% of property taxes paid. It would work like this for a homeowner: $150,000 house x 1.6% tax rate x .35 = $840 refund. For a farmer or rancher it might look like this: $2.5 million farm x 1.2% tax rate x .35 = $10,500 refund. Implementing the proposed 35% solution would cost $1.5 billion, which would require even larger state spending cuts and/or state tax increases. If Nebraska lawmakers cut state spending $750 million and in-creased state sales and income taxes $750 million, the state tax increase would be 17%. If there were no spending cuts, sales and income taxes would increase by 33%. If there were no state tax increases, state gen-eral fund spending would need to be reduced one third. To avoid these sharp tax increases and spending cuts, lawmakers have tried to find a political path to proper-ty tax relief with enough votes to overcome legislative filibusters (33 votes) and a likely gubernatorial veto (30 votes). Several property tax relief bills were introduced in 2019 and a consensus bill, LB289, emerged late in the session. The product of intense negotiations among Revenue Committee members and other senators ac-tive in the property tax-school finance debate, LB289 would have
1. raised the state sales tax rate from 5.5% to 6.25%, a 14% increase;
2. begin collecting sales taxes on candy, pop, bot-tled water, plumbing services, moving services and veterinary services for pets, among others;
3. increased cigarette taxes 56% to $1/pack; 4. provided state school aid of 33% of total edu-
cation costs per pupil to all schools; and 5. limited school spending increases to consumer
price index increases and growth in student numbers.
Every item on this list is politically controversial, and LB289 came up five votes short of the 33 votes needed
