Another Nebraska legislative session adjourned, another failure to produce meaningful property tax relief. If you are looking for someone to blame, look in the mirror.
We are the ones electing — over and over again — state senators and a governor who promise fantasy land in the form of tax cuts on top of all the government service we want. When the fiscal fairy tale sloganeering crashes into the real world where even the government’s bills must be paid and the state constitution requires a balanced budget, the partisan wheels engage, problem solving finds its familiar back seat, and the next round of campaign fingerpointing begins.
This will end only when we voters elect working majorities of representatives who deal in facts, reject ideological pandering and genuinely seek solutions regardless of political popularity.
The facts about the property tax problem in our state are relatively well known and currently can be distilled down to an overreliance on real estate taxes to fund K-12 public education.
Historically, the funding model between state and local government sources has been referred to as a three-legged stool — dollars coming, one-third each, from local property taxes, state income tax and state sales tax. Almost three decades ago, the state’s formula for determining state “equalization” aid — dollars generated from income and sales tax — to local school districts came close to hitting that target.
That was 25-plus years ago. And for the past 15 of those years, the successive governorships of Dave Heineman and Pete Ricketts have dominated a mostly subservient Unicameral primarily content to echo the governors’ be-all-end-all priority of “tax cut” demagoguery over honest efforts to deal with fiscal reality.
When state sales and income taxes failed to generate the funds called for by the formula, Heineman and Ricketts easily found more than enough support among senatorial minions to adjust downward the state’s contribution to K-12 public education funding to the effect of pushing up the amount called upon from local property taxes. The byzantine grinding of the formula and the state government’s willingness to pass the buck to local property taxes have combined to produce the current situation in which Nebraska public education statewide is funded 44% from property taxes, 30% from income taxes and 26% from sales taxes. Maybe even more remarkably, 213 of 244 Nebraska public school districts receive less than one-third of their funding from state sources.
Our present reality is that meaningful property tax relief depends on rebalancing the funding for K-12 education. At a minimum, that means adjusting the school funding formula and directing more state sales and income tax revenue to public school funding. A Revenue Committee effort led by Sens. Lou Ann Linehan and Mike Groene attempted such an undertaking through LB 289, which would have increased state revenue dedicated to education funding by raising cigarette taxes and the state sales tax by half a penny and removing sales tax exemptions from items like soda pop and junk food. That thoughtful hard work was easily squashed by Ricketts’ disingenuous characterization of LB 289 as “the largest tax increase in Nebraska history” and several clownish press conferences at various retail establishments. Ricketts’ legislative supplicants fell in line. LB 289 did not have a chance.
An even more far-sighted approach than LB 289 would be a complete overhaul and update of our education funding mechanisms meshed with tax reform that equitably balances, for the long term, the cost of public schools among local and state resources. A group of fair-minded and informed public officials could, through study and debate and toil, generate such structures to the benefit of Nebraskans; without a doubt such effort would be able to produce a better system than what currently exists. But given the prevailing political climate, it is sadly impossible to suggest with a straight face that an undertaking like that could convene, let alone that it might prevail.
Our recent history is to elect politicians based on how much and how loudly they sloganeer on cutting taxes. Voters hurriedly cast aside sincere effort by elected officials to honestly address real issues in favor of untruthful and undeliverable promises of politically ambitious demagogues. Ricketts received almost 60% of votes cast for governor in 2018. So long as we voters keep rewarding deceitful candidates’ assurances of a free lunch, difficult problems of public policy — like the property tax burden — will endure.