Figuring Out Your Property Taxes
Recently, many of you received your new property valuation notices. Once again, many of you saw increases in your property value, even if you made no improvements to your property. This is not surprising given the high-demand for housing, farm, and ranch land.
It is rare that a home or land is sold for less than the tax assessed value. When the market value of real estate rises, county assessors are required by law to adjust tax valuations to reflect those current market prices.
In determining your property tax bill, each political subdivision, such as counties, cities, and schools, must first set its budget. Once the budget is set, the tax base is divided into the budget to determine the levy. The levy multiplied by the tax assessed value of the property is the tax amount.
Your total individual property tax bill is the sum of each applicable political subdivision's tax request when applied to your property. Assessed value is one component of property tax. Political subdivisions determine their respective levies and choose to increase, hold flat, or decrease their spending relative to the previous year.
As I have described in prior newsletters, the Legislature has increased funding for K-12 public education, fully funded community colleges, and dedicated significant state dollars to property tax credit programs all in the effort to offer property tax relief. The Legislature also capped the annual growth of city and county property tax collections at 0% or the rate of inflation, whichever is higher, while providing specific exceptions for public safety and law enforcement.
To address this unsustainable rise in property taxes issue, we need to understand how the funding of the government in Nebraska has changed.
Back in 1999, the property tax made up 40.4%, the sales tax made up 30.4% and the income tax made up 29.2% of the shared revenue collections.
By 2023 the property tax made up 44.5%, the sales tax made up 28.6% and the income tax made up 26.9% of the shared revenue collections. This shows an incremental shift towards property taxes in the last two decades.
The long-term solution to the property tax problem begins with making strategic decisions with both revenues and spending. For example, one avenue is to capture more forms of consumption. Nebraska law features more than 100 specific sales tax exemptions, which leaves roughly $6.5 billion in transactions untaxed annually.
In my mind, necessities like food and business inputs should remain exempt. Everything else should be on the table. Greater controls on spending, such as spending caps, must also be considered.
Ultimately, the answer to controlling property tax's growth will require creativity, compromise, and political willpower to accomplish. I will continue to work with my colleagues to find ways to reduce property taxes.
I invite you to let me know your thoughts or concerns. My Capitol office telephone number is (402) 471- 2801 while my email is bdekay@leg. ne.gov. My mailing address is: Senator Barry DeKay, District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509.
