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Editorial
Property valuation declines making themselves felt
Tuesday, March 13, 2012
Nebraskans are known for their level-headedness, whether it's from the rolling prairie, the temperament of its legendary football coach or just its long agricultural tradition.
Yes, we sometimes miss out on the highs experienced by those living near the beaches or ski slopes, but we also miss the lows experienced by urban areas.
The latest proof is Nebraska bucking the national trend of declining property tax trends.
It always takes a while for the effects of declining property values to take effect, but the housing bust that started in 2008 has begun to make itself felt in tax receipts.
Last year, property tax collections rose only 1.2 percent, which is a .9 percent decline once inflation is taken into account. According to the federal Bureau of Economic Analysis, that's the first time property tax collections have fallen below the inflation rate since 1995 and only the third time in 40 years.
If the trend continues, governments may bring in fewer actual dollars this year than last, even without accounting for inflation. That's the first time that has happened since the Great Depression.
Nebraska's housing bubble didn't burst because it really never existed, so local governments -- mostly schools -- are being spared the worst of the decline in property taxes, especially in rural areas where farmland prices are climbing.
Farmland prices are climbing in Southwest Nebraska as well, but officials are concerned that conversion of irrigated land to dryland -- forced by the Republican River Compact dispute with Kansas, will cut into property tax revenue.
Nationally, school districts, which receive about 40 percent of property taxes collected, have been forced to cut 270,000 employees, or 3.3 percent of their workforce, since July 2008.
It takes a while for property taxes to come down -- tax lids also work as tax floors, many states average property values over multiple years, and equalization systems cut rates when valuations rise and raise them when they fall.
Regardless of property values, all levels of government spending must be scrutinized to make sure taxpayers get the most bang for their buck.