Two measures on the Legislature’s Tuesday agenda — LB 132 and LB 454 — seek to address Nebraska’s historical overreliance on property taxes to fund K-12 education.
LB 132: A commonsense approach to addressing property-tax reliance
As we noted last week, LB 132 would create the School Finance Review Commission, which would serve a similar purpose to the commission of the same name that was created in the late 1980s. The product of that commission was our current K-12 funding formula, which in its initial years did help reduce our reliance on property taxes. The formula, however, has been tweaked multiple times in the years since, often resulting in constrained K-12 funding and increased reliance on property taxes.
Taking another comprehensive look at how we fund schools in Nebraska can help lawmakers determine how to address this long-standing issue in a meaningful and sustainable way.
LB 454 would increase state funding of K-12, but lack of dedicated revenue concerning
LB 454 — with AM 789 — would provide an influx of state K-12 aid, phased in over a four-year period, to school districts that are heavily reliant on property taxes, meaning they rely on property taxes to fund at least 55% of their formula needs. In FY22, aid would go to districts whose property tax requirement exceeds 70% of needs, transitioning to 55% by FY25 and thereafter.
LB 454’s attempt to reduce the state’s reliance on property taxes by increasing state aid to K-12 education falls in line with recommendations made in several studies of the Nebraska tax code, including the 2013 Tax Modernization Committee Report.
It is concerning, however, that the bill does not designate a new revenue source to fund the increased state aid, which could create sustainability issues. The measure also will increase the disparity in levies between school districts since the stabilization aid will largely benefit lower levy districts.