LB 408, a revenue measure that has received a senator priority designation, will be debated by the Legislature tomorrow.

The measure, with committee amendment (AM 371), would limit local government property tax growth to 3% per year or 9% over a three-year period. As noted in a prior analysis, LB 408 could have harmful impacts on local governments and undermine the principle of local control.

The measure would have disparate impacts on local governments based on their mix of revenue streams. Most localities would see less in overall revenue under LB 408 while some others could see more in overall revenue if they choose to levy the full 3%. Many localities would see their revenue growth kept well below 3%. The bill would sunset in 2027 and does allow school districts and other local governments some exclusions to the cap, which are described in the committee statement.

Another pending amendment, AM 973, would create further exclusions to the cap, including one that appears intended to protect school districts with increasing valuations from a concurrent decrease in state aid, which could occur under LB 408 with the committee amendment. The exclusion, however, doesn’t consider a district’s growing student needs.

OpenSky analyzed how 13 school districts would have been impacted by AM 973 over the course of five years. Of the 13 districts:

  • Four would either gain little or nothing under AM 978 as compared to the committee amendment;
  • Six would lose less than they would under the committee amendment to LB 408, but would still experience a significant reduction in total receipts compared to what they actually received; and
  • Only three could be made whole under AM 973 compared to what they actually raised.

And while expanding the exclusions available to local governments may help some make up for lost revenue, it also means a much more complicated calculation. Large cities and counties would likely be better equipped to absorb the administrative burden but smaller localities may struggle to comply with the measure.

NET Nebraska will stream debate on LB 408 live.

Methodology note: Our analysis is unable to account for real growth value as defined in the bill because the data is unavailable. Because of this, the impact of the bill may be slightly different than our analysis indicates.