A lawmaker is proposing a massive shift in how Nebraska delivers property tax relief, saying the current system benefits corporations and even out-of-state landowners.
NATE JENKINS / The Associated Press | Posted: Thursday, January 8, 2009 12:00 am
Ted Turner doesn’t need a tax break.
That’s the message from an Omaha lawmaker who on Thursday proposed a massive shift in how Nebraska delivers millions of dollars in property tax relief. The current program, paid for with $115 million in state tax dollars, unfairly benefits corporations and out-of-state landowners like Turner, the state’s largest landowner, said Sen. Tom White of Omaha.
His proposal is expected to attract attention from state lawmakers as they wrestle with how to provide some tax relief to Nebraskans in a down economy.
“The first rule of a tax break is keep it in your state,’’ White said after introducing the bill (LB13) to the Legislature on Thursday. “The last thing you want to do is give a tax break to Ted Turner so he can take it back to Atlanta.’’
White estimates that over the last two years, Turner has received nearly $150,000 worth of state-funded property tax relief from the program he wants to change. Its estimated that Turner owns about 425,000 acres in Nebraska.
By comparison, the owner of a $150,000 home has received less than $260.
That’s because the current program spreads the $115 million in tax credits to all owners of real property: Residential, commercial and agriculture alike.
Under his proposal, ag and commercial land would be cut out of the tax-break package. Instead, the package would be solely aimed at homeowners in the form of a homestead exemption, where $13,000 in assessed value of everyone’s home would be exempt from property taxes.
The $115 million, as it does now, would be spread among the counties to pay for the tax relief. Some have called such programs a tax shift because state tax dollars pay for a local tax break.
The homestead exemption White proposes would lower the tax bills of every homeowner, whether one owned a $300,000 house or $30,000 house, by the same amount: $275.
The current property tax credit program provides relief of about $86 per $100,000 of valuation. For the owner of a $150,000 house, for example, that equals about $129.
According to calculations by White’s office, less than half the $115 million set aside for property tax breaks goes to homeowners.
He’s billing it as a “bailout for Nebraska’s middle class.’’
In reality, it would unfairly leave out many Nebraskans, namely farmers, say some rural senators.
“Ag land in rural Nebraska is what pays for a lot of schools and if anyone gets property tax relief, ag should be one of the entities that gets it,’’ said Sen. Tom Hansen of North Platte, a rancher. “You just can’t pick out one group of Nebraskans that gets it.’’
Ag land makes up about 22 percent of the total, statewide land value of approximately $133.5 billion.
The state’s most populous counties, such as Douglas and Lancaster counties, received the largest slices of the $115 million set aside for the property tax relief program.
They would likely get even more should the plan from White, an urban senator, be approved.
Changing the program isn’t the only decision lawmakers will have this year. If they choose to leave it as is, they will still have to decide whether to extend the program another two years or to change the amount of money in it.
Hansen is among those opposed to extending the program. He believes doing so will discourage counties, who are at risk of becoming “addicted’’ to the program, from providing true, long-term tax relief by reducing spending and cutting their tax rates.
“My constituents aren’t going to like it,’’ Hansen said of his position, “but if we get counties addicted to property tax relief it will turn into an annual expense.’’