A new school year has begun. Nebraska’s rural school districts are enjoying an embarrassment of riches across the state as significant increases in agricultural valuation are occurring again this year.
Taxpayers should express their opinions about school taxes by attending their annual school budget hearings that will be held over the next few weeks. I urge each of you to attend your local hearing, ask questions and learn about the budget being proposed.
Too often, the budget is constructed by the school administration with little involvement from board members, and sometimes the board needs encouragement from the public to ask the hard questions.
Many times, no one from the public appears, but the board hears plenty of complaints at the coffee shop after the budget is set. That isn't being fair to a school board that set aside time for a hearing to receive public input.
On Aug. 15, I will be in Kearney addressing the Farm Bureau about school finance. The state aid formula, known as TEEOSA, was developed in the early l990s.
TEEOSA is an acronym for Tax Equity and Educational Opportunities Support Act. It was designed to address widely varying tax levies and a shortfall in funding for low-valuation districts.
It worked fairly well until 2008, when residential real estate values began to decline, while farm and ranch properties spiraled upward.
TEEOSA is funded with sales and income tax, and consumes 25% of state revenues, but over half of Nebraska’s school districts are unequalized.
One suggested remedy to restore equity (remember, that word is a part of the formula) is to lower the valuation of agricultural land from 75-65% of real value.
I oppose this solution because it is transitory and because it produces significant variance in benefits depending on the percentage of agricultural land in the taxing district. In a highly agricultural district, like most of District 43, a drop in valuation will increase the taxes on personal property, farm homesteads, and residential properties in villages and cities by 13% -- yet will still leave a significant shortfall in funding that must be made up by an increase in levies on the only other available asset -- ag land.
In an urban county like Douglas County a farmer will see a 13% cut in taxes, with little impact on the residential property in Omaha.
I don’t believe that Legislative District 43 farmers and ranchers want to impose a 13% tax increase on their personal property, their homestead, or on their friends in our towns and villages in return for a meager reduction in taxes on their ag land that will disappear in a year as valuations continue their upward spiral.
Nebraska’s lawmakers do not want to accept the fact that new avenues of taxation must be developed, but you can’t go back to the same well time after time or the well will run dry. With grain prices on a continual slide, I feel that most farmers are nearing the point right now. That well is already dry.
Most of Legislative District 43 is rangeland that runs cattle, but the bulk of the state is farm ground, and those farmers will demand a change in taxation methods since crop prices are already below the costs of production without any consideration of property taxes.
It is time for the legislature to reevaluate the formula, and I intend to push for significant changes to the formula in 2015.
I will need your help to get that done.
As always, I value your input, and welcome phone calls, emails and personal visits from you.
Sen. Al Davis, State Capitol, PO Box 94604, Lincoln, NE 68509. Phone (402) 471-2628. Email firstname.lastname@example.org