School funding bill seeks property tax reduction

January 29, 2019

Legislation designed to ensure state funding support for basic education costs in all of Nebraska’s public schools would address the current “inequity in K-12 student funding” while assuring substantial property tax relief, Sen. Curt Friesen of Henderson said Monday.

Only 69 of Nebraska’s 244 school districts receive state funding for what is described in the school aid formula as state equalization aid, and they are primarily in urban areas where both enrollment and needs are growing, leaving rural districts ever more dependent on local property tax revenue.

The bill (LB497), co-sponsored by a dozen senators, would broaden the sources of state aid funding to help replace some property tax funding through elimination of some sales tax exemptions, increases in cigarette and alcohol taxes, and elimination of the personal property tax exemption.

Other new revenue would come from collection of state sales taxes already owed for internet purchases.

Friesen’s proposal would also make a one-time allocation of $150 million to help replenish the state’s cash reserve fund.

The bill would guarantee every public school receives state support equal to 50 percent of its basic education funding needs while ensuring the additional state aid is used to replace local property taxes.

The measure has been assigned to the Legislature’s Revenue Committee for a public hearing. No fiscal analysis of costs has yet been attached to the bill.

“The state has an obligation to support our children’s education, regardless of where they live or the school they attend,” Friesen said.

“However, we have situations today where the state is paying for 100 percent of basic education funding for students in one school district while covering less than 1 percent of the basic education costs in another.”

Roughly 60 percent of all property taxes collected in the state go to K-12 school funding, Friesen noted.

All co-signers of the bill hail from rural and small-town districts.

Sen. Tom Briese of Albion, who has introduced a comprehensive tax reform package of his own, said “the only responsible path moving forward in providing the meaningful and significant property tax relief we need is raising new revenue.”