INTERVIEW: Sen. Linehan Rallying Support for Property Tax Reform Package


Article By Paul Hammel / World-Herald News Service

LINCOLN — A stalled property tax relief plan is headed for some tinkering, and a media blitz across the state.

State Sens. Lou Ann Linehan of Elkhorn and Mike Groene of North Platte said Friday that they are eyeing amendments to their Legislative Bill 289 in hopes of gaining the support of the Omaha, Millard and Lincoln school districts — the state’s three largest school districts and the major opponents of their proposal.

The senators met with the superintendents of the three districts on Thursday in what Linehan described as a “helpful” discussion.

It was clear, the lawmakers said, that the big school districts do not trust that the State Legislature, in the future, will continue to fund the huge increase in state aid to K-12 schools called for in LB 289. So the senators said they’re looking at an amendment that would allow school boards to vote to override their tax levy lid and cover funding shortfalls in the event the Legislature declines to fully fund state aid.

It’s not an unreasonable concern, Linehan said. Just this session, the Legislature’s Appropriations Committee has called for trimming back the governor’s recommendation to fully fund state aid to local schools.

“We need to get away from the smoke and mirrors that happens with state aid,” Linehan said in a conference call with reporters. “We need to make it clear that we’re going to (fully) pay them.”

Whether the concessions will bring the Omaha Public Schools on board with LB 289 is unclear. A statement from a district spokeswoman on Friday afternoon said that the district still had concerns about “negative impacts” of the bill and that it plans to review any proposed amendments.

Linehan and Groene, in an effort to better explain the complicated, multifaceted bill, are driving to Lexington, Kearney, Grand Island, Columbus and Norfolk this weekend for interviews with local media.

Their proposal stalled after three hours of debate Tuesday, and cannot, under a rule adopted by the speaker of the Legislative, return for debate unless the bill’s sponsors can show they have the support of at least 33 of the one-house Legislature’s 49 state senators.

Linehan declined to say whether she had the required 33.

“We have a lot of undecideds, is what I would say,” she said. “It’s a big package. We have a lot of legislators who are looking at it.”

She added that another amendment being drafted would provide a higher increase in the earned income tax credit for low-income Nebraskans to offset the sales tax increases in LB 289. That, Linehan said, should bring the support of more “progressives” within the nonpartisan Legislature.

LB 289 would raise state sales taxes by a half-cent and the cigarette tax by 36 cents a pack, and would impose new taxes on several home repair services and things like pop, candy and bottled water.

The anticipated $372 million in new revenue would be coupled with funds in the existing property tax credit program to provide a $480 million boost in state aid to K-12 schools.

State aid would be allocated under a new formula, which would guarantee at least $3,400 in state funding for every K-12 student and assure that at least 33% of a school district’s budget would be picked up by the state. That would mean millions of dollars in new state aid to the state’s smallest, rural school districts and smaller increases in funding for the largest school districts.

But the large districts question whether the new spending lids in LB 289, which are based on growth in the consumer price index and construction activity, will eventually choke budgets and harm classroom education, particularly if a future Legislature, in a tough budget year, cuts back on state aid.

The biggest support for LB 289 has come from rural school districts and farmers, who have seen little state aid to their local schools and skyrocketing property tax bills because of the escalation in the price of farm and ranch property. The largest opposition, besides the big school districts, has come from Gov. Pete Ricketts, who has condemned the plan as “reverse Robin Hood” and as a tax-shift approach that has failed in the past.

Linehan said LB 289 would reduce property tax bills for schools by an average of 20% statewide and shift Nebraska away from its heavy reliance on property taxes to fund local education.

That, she and Groene said, is a better bargain than a tax-cutting initiative that a grassroots rural group hopes to place on the 2020 ballot. It would call for a 35% income tax refund on property taxes paid, which would require $1 billion in state spending cuts or tax increases.

“If you think our tax increase is large, just wait and see what happens if that gets on the ballot … and that could pass,” Groene said.