Senators reject increased property tax credit, advance main budget bill

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May 9, 2013 - 5:44pm

The Nebraska Legislature on Thursday rejected a proposal that supporters said would create a "token" reduction in property taxes, before giving first-round approval to the main state budget bill.

The property tax proposal by Sen. Ken Schilz of Ogallala would have added $15 million over the next two years to an existing property tax credit. That credit works by using state tax dollars, mostly from the sales and income tax, to offset property taxes that would otherwise be collected by local governments.

Last year, the Department of Revenue says, it cost $115 million, and reduced property taxes by $71.50 on a $100,000 house. Schilz’ proposal would have reduced those taxes by about an additional $5.

Schilz conceded that was a "token" amount. But he said reducing property taxes was what people want the Legislature to talk about. Sen. Bill Kintner of Papillion picked up that theme in talking about the proposed change to the state budget. "I want to tell the taxpayers out there we haven’t forgotten you. There’s a spending spree going on, and I understand it. But you gotta be asking ‘What about us? What about us?’ I want to go on record that we have not forgotten you."

Sen. Galen Hadley of Kearney, chairman of the Revenue Committee, was among the senators who opposed the proposal. Hadley said about $3.2 billion a year in property taxes are collected in Nebraska, mostly for schools, with the next biggest chunks going to counties and cities. And he said all those local governments are headed by elected officials. "If our citizens do not like the property tax burden, they ought to start by talking to the people they elect. They ought to talk to the people who are setting these property tax rates," he said.

Only 14 senators voted for Schilz’ amendment, with 15 opposed and 18 not voting, which has the same effect as a ‘no’ vote.

Lawmakers also debated an amendment to take away $16 million from the University of Nebraska. Sen. Russ Karpisek of Wilber said that’s the amount it will cost to ensure a tuition freeze for the next two years. Karpisek said it sounds like a good idea, but he has reservations. "It’s great. It’s wonderful. Families are happy. No kidding. But are we in the business of giving back tuition or paying for tuition?" he asked.

Hadley opposed the amendment, saying the tuition freeze is needed. "If you come from poor families, there’s probably quite a bit of financial aid you can get. We call it "need-based" aid. If you’re rich, your parents can afford to send you to school. It’s the middle class that’s having trouble paying the bills. And that’s who I see can be benefitted from this tuition freeze," he said.

Karpisek withdrew his amendment before senators voted on it, keeping the funding in the budget. But Lincoln Sen. Colby Coash warned the issue could come up again in the future. "What about the long term? What happens to the student who’s going to be in four years? We hold tuition flat for two years, we don’t do anything in three, how high will the jump be in three years? We’ll be looking at a double digit increase in the next budget cycle," Coash said.

Senators then voted 36-0, with 12 not voting, to give the main budget bill first round approval.

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