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Nebraska Considers Property Tax Cap

by Rob Boxley, Chicago, February 2019

 

The Nebraska Legislature will vote this session on a proposed constitutional amendment to limit property tax increases by cities, counties, schools, and other local governments to 3% a year. If the amendment passes the legislature, it would also need the approval of voters before becoming law.

 

Legislative Resolution 8CA

 

At the request of Governor Pete Ricketts, Senator Lou Ann Linehan introduced Legislative Resolution 8CA. The bill states that the total amount of property tax revenue raised by a political subdivision in any fiscal year shall not be more than 3% greater than the amount raised in the prior fiscal year except to pay bonded indebtedness.

 

There is an option of holding an election to win approval to raise tax revenues higher than 3%. The cost of such an election would be paid by the tax jurisdiction seeking the higher taxes.

 

Focus on Cutting Property Tax Growth

 

During his annual State of the State address, Governor Ricketts spoke about his recommendations for the budget between the fiscal years 2019 and 2021. He says his goals are to cut property taxes and promote structural property tax reform.

 

"Property taxes are the No. 1 thing people are talking about," Ricketts said at a budget briefing. "This is the thing most Nebraskans are most unhappy about."

 

Budget limits have not been effective, he said, because political subdivisions have figured out ways around them. A better plan is to manage how much property tax is collected.

 

Unintended Consequences

 

OpenSky Policy Institute Executive Director Renee Fry released a statement critical about the tax ideas discussed by the governor.

 

"Property tax caps tend to have unintended consequences, which is why many tax policy experts from across the political spectrum are not in favor of them," Fry said. "We hope there will be more comprehensive approaches to property tax reform put forth by lawmakers this session.”