Property tax breaks for older Nebraskans advance; breaks for farmers stuck
March 7th, 2014
Omaha, NE — The state’s homestead exemption program works by having the state in effect pay all or part of the property tax bill for homeowners who are 65 or older, or disabled, and have incomes that fall below certain amounts.
About 46,000 people benefit from the program, although that number fell last year. Now, the Revenue Committee is proposing to make more people eligible by raising the income thresholds. Sen. Galen Hadley of Kearney, chairman of the committee, said the bill would also phase out benefits more slowly as incomes increase. “We’re trying to do away with the ‘cliff effect,’ which means that you make one more dollar, and you basically lose all of the benefits you were getting,” he said.
Currently, a married couple with $40,000 income, living in a $100,000 house and owing $2,000 a year in property taxes, can have the state pay $500 of those taxes. But if they get $1 more income, the state pays nothing. Under the proposal, the state would pay $1,000 of that same couple’s taxes.
Sen. Greg Adams of York supported the proposal. But Adams said, as more and more baby boomers retire and qualify for the exemptions, it raises a question. “Are we shifting, and how much are we shifting, our residential property tax burden onto our younger
homeowners?” he asked.
Sen. Dave Bloomfield of Hoskins said the proposal doesn’t go far enough. ”I will go ahead and support this because it is a sliver of property tax relief. But it’s nowhere near where we need to go. We need to quit spending money, and let’s give a little money back to the people that are paying property taxes,” Bloomfield said.
Hadley challenged his fellow senators to be specific. “It’s easy to be for tax relief. It’s easy to be for property tax relief. It’s easy to be for income tax relief. But I want to ask you the second question: What are you willing to cut?” he said.
Hadley says the homestead exemption increase, targeted at elderly and disabled homeowners, would cost about $4 million a year. It got first-round approval on a vote of 34-0. A proposal by the Appropriations Committee directed at all property owners, would be worth around $12 to $15 to the owner of a $100,000 house. That would cost the state about $25 million.
Thursday afternoon, a proposal by Omaha Sen. Beau McCoy aimed at cutting property taxes for farmers and ranchers failed to make it out of the Revenue Committee. That proposal would reduce the percentage of land value that is taxed from 75 to 65 percent.
McCoy said it would help farmers who have seen land values and taxes skyrocket in recent years. But Sen. Kate Sullivan of Cedar Rapids said it could leave many school districts in rural areas strapped for funds.
With the committee deadlocked 4-4, the bill failed to advance. McCoy said later he hasn’t yet given up on the issue for this year.
Comments are closed.