High property taxes for farmers ties back to how education is funded in Nebraska

The issue of high property taxes goes hand in hand with how the state funds education, and many argue the system isn’t fair for farmers or students.

One of those people is former teacher and rancher Jack Gould.

Gould’s family moved to Nebraska in the 70’s, and the social studies teacher picked up ranching.

“It was at that point I began to see the connection between property taxes and education,” Gould said.

Gould first taught at Lincoln Southeast where he said he never had a problem getting supplies.

But when he began at Raymond Central he found the equipment old and curriculum lagging behind Lincoln’s.

It’s because of a state law that has essentially left many rural schools without much state funding. Forcing schools to rely on local property taxes to get money- the demand falling on the shoulders of farmers.

“I saw the inequity, I saw the needs, at the same time here were farmers paying 70 to 80 percent of the school costs,” Gould said.

So he sued the state in 1989, asking the state to find a fair way to fund education. After winning in lower courts the suit narrowly failed in the supreme court and the state legislature passed a bill they thought would lessen the reliance on property taxes.

But that bill, LB1095, has never been fully funded and the situation is largely the same.

According to a study done by Open Sky Policy Institute, a non-partisan research organization based in Lincoln, property taxes are still the main funding source for K-12 education in Nebraska.

In fact, property taxes accounted for nearly 2 billion dollars of public school funding for the 2016-17 year. The state paid 1.4 billion.

Even more, Gould said most of that money goes to urban schools.

“Go to rural areas and you realize how little the schools get,” Gould said. “Some school districts get none of the money. Some like ours, I think we had a 9 million dollar education budget last year and the state gave us $145,000.”

State senator Curt Friesen sees these same issues in his district near Henderson.

“It’s totally unfair,” he said.

He said Nebraska farmers are taxed at a rate of 32-40 percent. According to the IRS, the average tax payer is taxed at a rate of 10 percent.
“No other industry is taxed at a rate like that,” Friesen said.

At the same time, he said there are schools in his district and others across Nebraska getting less than 1 percent of their basic funding needs paid for by the state.

He’s proposing a bill that would change that.

“My bill over three years would bring that basic funding, that state aid to 50% to every school in the state,” Friesen. “No matter where you live, so it’s more equal for students.”

He said there’d still be schools getting more than that if they need it.

This would reduce the burden of property taxes for farmers and everyone across the state, he said.

But the money has to come from somewhere.

Friesen suggests upping the tax on cigarettes and alcohol. Though he did say he was open to other possibilities.

While this idea sounds good to Gould, he thinks the most fair solution would be to remove the burden from property taxes to income tax, saying “it’d hurt everyone equally.”

“Whatever the solution may be it has to be equitable to all,” Gould said. “It has to be something that takes care of kids, as well as farmers and it has to be something that all people share it, shouldn’t be something that some people carry most of the burden and the others sit back and watch.”

Next week we’ll talk with Governor Pete Ricketts and other legislators about a solution.