This last session, LB 2 was enacted. It creates a correction to address an unfair property tax burden on ag-Iand owners.
During the last 25 years, ag-Iand valuations have skyrocketed, simply due to the fact that God makes more humans but He doesn’t make more land. Meanwhile in rural Nebraska, residential and commercial property has increased at a much slower rate, or in some instances stagnated or even decreased.
LB 2 addresses this inequity in school bond elections; it attempts to bring back a fair proportionality of who pays when new school buildings are erected.
Adding to the injustice, while small town populations may have declined, farmer numbers have declined even faster. Farmers today are more productive, and in order to be profitable, larger farms are a necessity, and thus fewer workers are needed. Ag-Iand owners in most school districts have very little voter representation and are simply out-voted when it comes to bond elections. If your home is in a rural school district, you may have noticed over time that what you pay in school taxes has actually declined — if so, you can thank a farmer, because due to rising farmland valuations, the cost of operating your school and paying off existing bonds has shifted to them.
To address the problem, LB 2 lowers the unadjusted valuation of ag-Iand from 75% to 50% for school bond levies only. Residential and commercial values remain the same at 100%. The effective start date of the legislation is Jan. I. Ag-Iand will still be valued at 75% for all present schools bonds or any new projects approved before that date.
I was a little surprised to see that the Hershey school district has announced a $17.9 million bond election to be concluded Aug. 10. I would hope the bond election was not hurried along in order to avoid the effects of LB 2, ignoring the will of Nebraskans to fix an injustice. I make no judgment call on the necessity of the school construction planned to improve the education environment for the children of the taxpayers living in the Hershey district, but I would say that the timeline seems to be inadequate to allow for patrons to ask questions, receive answers and give them time to verify the information that is given.
Currently ag-Iand in the Hershey district makes up 53% of the total taxable valuation. After LB 2 goes into effect, it will drop to 43% for purposes of new school bond debt. Yes, there will be a slight corrective shift back to residential, commercial and centrally assessed (railroad, etc.) property owners. If someone believes school improvements are needed, I assume they would be willing to pay a fair share. The ability to cause another to pay a larger share should not be a deciding factor.
I see no rational reason to rush the vote. If the election is successful, it will only build animosity between town residents and the farm community. Hurt feelings in a small town can manifest themselves in more places than just the school gymnasium. For the benefit of the community, I believe the Hershey bond election should have waited until after the first of the year.
In government sometimes when you fix a problem, another is broadened. LB 523 is a sister bill to LB 2 that is still on general file, and it needs to be enacted to plug a loophole in present law. Because ag-land valuations have skyrocketed, many school districts can fund their operations with a levy well under the 1.05 limit. Districts have the ability to levy up to 14 cents for a building fund if their total levy stays under the lid. As long as a school district doesn’t use bonds to pay for a building project the school board — using the building fund — can on its own approve it without a vote of the people.
Since LB 2’s 50% ag-Iand valuation only applies to bond funding, more school districts will be tempted to build schools with general funds where farmland remains at 75% of appraisal. Nebraskans historically have expected to vote on major school construction projects; LB 523 would force all school boards to honor those expectations.
Mike Groene represents Lincoln County – dist. 42 — in the state legislature. Contact him at email@example.com or 402-471-2729.
© 2021 The North Platte Bulletin. All rights reserved.