The time for property tax relief is now!
Over the past several months, I, Nebraska State Senator, Steve Erdman, of Legislative District 47, have been collaborating with a coalition of Senators, farm groups and concerned citizens, facilitated by Mr. Trent Fellers, a former Lincoln City Councilman, to put together a plan for property tax relief which will appear as a measure on next year’s November ballot.
As I promised in a press conference on May 23rd, I will introduce this plan as a Legislative Resolution in the Unicameral Legislature in January. At the same time, a citizen-led initiative will soon begin collecting signatures for the same plan. If the Legislative Resolution fails in the Legislature, the citizen-led initiative will ensure that this same plan appears as a measure on the ballot for a public vote in November 2018. The only catch is that we will need to collect 85,000 signatures from registered voters from across the State by July 7.
The Legislative Resolution I will introduce in the Legislature is called the 50/50 plan. This plan will give every property owner in the State a 50 percent credit or refund on that portion of their property tax bill which is paid to public education. Property owners will pay the full amount of their property taxes as usual; however, on April 15th, or whenever they decide to file their State income taxes, they will be able to declare 50 percent of the education portion of their property tax bill as a credit or refund on their State income taxes. In most cases, education receives 60 percent of a property owner’s property tax bill. So, the 50/50 plan will result in a 30 percent property tax reduction for most property owners. Across the State, property owners will save a total amount of $1.1 billion in property taxes.
Here’s an example of how it will work. Suppose Tom the Taxpayer owes $10,000 in property taxes. Tom will pay the full amount of his property tax bill, which is $10,000. $6,000 of Tom’s property taxes will go to fund public education. So, on April 15th Tom will declare a credit of $3,000 on his State income taxes. If Tom still owes money to the State, say $3,000, then he will pay that amount back to the State. However, if Tom had already paid his regular income taxes through payroll deductions, then he will receive a refund check for $3,000.
Some people have asked me if the 50/50 plan is property tax relief or income tax relief. My response to this question has always been the same: “I don’t care what you call it, as long as the words ‘tax relief’ is in the name.”
The 50/50 plan is friendly to education. The 50/50 plan will fully fund public education as well as all other tax asking entities in the State. Every agency within the State with tax asking authority will receive its allotted funding in full. The State’s obligation will be to the property owners, not to the public schools or to any other agency. Therefore, those working in public education or those working in any other agency funded by property taxes have no reason to fear a potential loss of funding.
Another advantage of the 50/50 plan is that it makes the State Legislature, instead of local governments, responsible for reconciling the $1.1 billion difference in lost revenues. Some have criticized the 50/50 plan, suggesting that it would necessarily result in higher sales taxes or higher income taxes. But, this is not true. There is nothing in the 50/50 plan which mandates higher taxes of any kind. Others have criticized the 50/50 plan saying that it would take tax incentives away from businesses, but this is not true, either. There is nothing in the 50/50 plan which takes tax incentives away from businesses. These kinds of criticisms of the 50/50 plan only present false dilemmas about the plan, and they are designed to scare the public into voting against the plan. These kinds of criticisms of the 50/50 plan present false dilemmas about the plan because they conveniently forget that the State Legislature may pay for the $1.1 billion in lost revenues simply by cutting spending from the State’s biennial budget. Moreover, these same kinds of scare tactics would be lodged against any plan which seeks to reduce property tax revenues by the sum of $1.1 billion.
We have been talking about property tax relief in our State for the past 40 years. Until now, the State Legislature has never had the fortitude to address this problem in any substantial or meaningful way. The burden of property taxes has now become unbearable for many property owners across the State. Wherever I go, people ask me to deliver on property tax relief, so I have made this my top priority this year as a Legislator. I believe the time to act is now, and the 50/50 plan is the best way we have come up with to deliver on property tax relief for all property owners living in Nebraska. I sincerely hope you will join us in our effort to reduce your property taxes.