Tag Archives: Nebraska

Today, President Donald J. Trump declared that a major disaster exists in the State of Nebraska and ordered Federal aid to supplement State, tribal, and local recovery efforts in the areas affected by a severe winter storm, straight-line winds, and flooding beginning on March 9, 2019, and continuing.

The President’s action makes Federal funding available to affected individuals in the counties of Butler, Cass, Colfax, Dodge, Douglas, Nemaha, Sarpy, Saunders, and Washington.

Assistance can include grants for temporary housing and home repairs, low-cost loans to cover uninsured property losses, and other programs to help individuals and business owners recover from the effects of the disaster.

Federal funding is also available to State, tribal, and eligible local governments and certain private nonprofit organizations on a cost-sharing basis for emergency work in the counties of Adams, Antelope, Blaine, Boone, Box Butte, Boyd, Brown, Buffalo, Burt, Butler, Cass, Cedar, Cherry, Colfax, Cuming, Custer, Dakota, Dixon, Dodge, Douglas, Fillmore, Frontier, Furnas, Gage, Garfield, Gosper, Greeley, Hall, Harlan, Holt, Howard, Jefferson, Johnson, Keya Paha, Knox, Lancaster, Lincoln, Logan, Loup, Madison, Merrick, Morrill, Nance, Nemaha, Nuckolls, Otoe, Pawnee, Pierce, Platte, Richardson, Rock, Saline, Sarpy, Saunders, Scotts Bluff, Seward, Sherman, Stanton, Thayer, Thurston, Valley, Washington, Wayne, Wheeler, and York and the Santee Sioux Nation, Ponca Tribe of Nebraska, Omaha Tribe of Nebraska, Sac and Fox, and Winnebago Tribe.

Furthermore, Federal funding is available on a cost-sharing basis for hazard mitigation measures statewide.

Pete Gaynor, Acting Administrator, Federal Emergency Management Agency (FEMA), Department of Homeland Security, named Constance Johnson-Cage as the Federal Coordinating Officer for Federal recovery operations in the affected areas.

Damage assessments are continuing in other areas, and additional areas may be designated for assistance after the assessments are fully completed.

Residents and business owners who sustained losses in the designated counties can begin applying for assistance today by registering online at http://www.DisasterAssistance.govor by calling 1-800-621-FEMA(3362) or 1-800-462-7585 (TTY) for the hearing and speech impaired. The toll-free telephone numbers will operate from 7 a.m. to 10 p.m. (local time) seven days a week until further notice.

 

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Today, Governor Pete Ricketts issued a statement following news that President Donald J. Trump had approved Nebraska’s expedited request for federal disaster assistance.  Governor Ricketts submitted the request following devastating flooding and severe weather impacting virtually every region of Nebraska.

 

“Thank you to President Trump for his quick approval of Nebraska’s request,” said Governor Ricketts.  “Nebraskans have already been stepping up to begin the journey to recovering from the most widespread natural disaster in our state’s history.  As we rebuild together, federal assistance is a key part of ensuring that we keep Nebraska strong and growing.”

 

President Trump’s disaster declaration can be found by clicking here.

 

On Tuesday, Governor Ricketts signed and submitted Nebraska’s expedited request to the federal government for disaster assistance.  A copy of the request can be found by clicking here.


U.S. Senator Ben Sasse issued the following statement regarding the President’s emergency declaration for Nebraska.

“I’m grateful for the President’s expedited decision. We’ve got a long recovery ahead, but Nebraskans are going to get the job done. Our people don’t quit, I’ve met multiple parents who have lost their homes, but as soon as they get to shelters their families start to organize volunteers. That’s who we are. Nebraskans have grit, and we’re grateful for the support of our federal partners as we work to rebuild our communities.”


Congressman Adrian Smith (R-NE) released the below statement following President Trump’s announcement of a Major Disaster Declaration for the State of Nebraska.

“I appreciate President Trump acting quickly and decisively to recognize the suffering of so many Nebraskans by issuing a Major Disaster Declaration,” said Smith. “Extreme weather and flooding have destroyed many communities, farms, and ranches throughout the state and additional resources will go a long way toward mitigating the ongoing crisis and beginning the recovery process.”

Scoular, an employee-owned company based in Omaha, Neb., that offers diverse supply chain solutions for end-users and suppliers of grain, feed ingredients, and food ingredients around the globe, has announced that an indirect, wholly-owned subsidiary of the company will build a new freeze-drying manufacturing facility in Seward, Neb. The facility will establish Scoular’s new freeze-dried pet food ingredients platform. Approximately $50 million will be invested to build this initial facility, which is expected to create nearly 100 new jobs once operational.

“For 126 years, Scoular has invested in the people of Nebraska. We are excited to build on this legacy and advance our strategy with a unique facility that brings all phases of the freeze-drying manufacturing process under one roof,” said Scoular CEO Paul Maass. “It was clear to us following an extensive national search that Seward is an ideal community for us to join and grow together. We are excited to begin this process with the people of Seward.

As the pet food industry has grown and expanded, so too has the need for quality ingredients. Pet owners increasingly seek protein-rich, nutritious and convenient products. Scoular has worked with pet food partners for years providing procurement and supply chain solutions. This facility will provide our pet food customers a simplified and efficient ingredient supply chain, while meeting the fast-growing demand for freeze-dried protein ingredients.”

“This latest expansion by Scoular, one of America’s largest private companies, is a testament to our state’s world-class business climate and agricultural strength,” said Governor Pete Ricketts. “Their investment in Seward will deepen their already strong roots in Nebraska, create new great jobs, and grow our state.”

“We are very excited to welcome Scoular to the Seward community. Communities across Nebraska don’t see very many $50 million economic development projects and Seward hasn’t seen a large industry come here since Walker, now Tenneco, built their facility more than 40 years ago,” said City of Seward Mayor Josh Eickmeier. “We are truly blessed to have a new community partner like Scoular.”

A ground-breaking ceremony is anticipated for June, which will celebrate the start of construction on an approximately 105,000-square-foot state-of-the-art manufacturing facility at the Seward/Lincoln Regional Rail Campus. Construction will take approximately 14-16 months, with the goal of being operational by early Fall 2020.

One of the many reasons Seward was chosen was the available labor pool of talented, hard-working people. As the company begins to recruit for jobs at the new facility, it looks forward to hiring from within Seward and surrounding communities for new positions.

“We appreciate the teamwork and partnerships between Scoular, the community of Seward and the State of Nebraska that have made this project a reality,” said Department of Economic Development Director Dave Rippe. “Scoular is a valued member of our business community, and we’re excited to see that relationship continue to grow and thrive.”

Last week’s bomb cyclone continues to inundate parts of the Midwest with flood waters this week. Following the storm that hit Nebraska the hardest, the flood waters made their way downstream over the weekend to include, Iowa Kansas and Missouri. Multiple levees have been topped or breached, which has swamped farmland and small towns along the Missouri River.

Some areas broke record levels, including those set in the historic floods of 2011 and 1993. The Army Corps of Engineers has reduced water releases from the Gavins Point dam over the weekend, but much of the current problem stems from the saturated Platte River in Nebraska. Still, releases from Gavins Point have been above average since last June, stemming from a wet spring and fall last year. Nearly the entire lower Missouri River, along with the Mississippi River, are included in flood warnings.

Producers are urged to contact their local Farm Service Agency to find information on assistance programs. In addition, the Nebraska Farm Bureau has set up a relief fund and exchange. Details of the fund can be found at www.nefb.org.

LINCOLN, Neb. (AP) — With their session nearly halfway over, Nebraska lawmakers are still trying to unite behind a plan to lower property taxes amid uncertainty over how to cover the cost.

Members of the tax-focused Revenue Committee are sorting through their options but signaled they’re open to a sales tax increase, although that move would undoubtedly face resistance from Nebraska businesses. They’re also looking at an income tax cut and getting rid of sales tax exemptions.

Lawmakers face the prospect of a new statewide ballot measure to reduce property taxes in the 2020 general election.

Sen. Lou Ann Linehan, chairwoman of the Revenue Committee, says she’s concerned that if lawmakers don’t act this session, the petition drive could gain momentum and be approved by voters, forcing state officials to make drastic cuts.

In the opening paragraph of the FFA Creed there is the line, ” in the promise of better days through better ways, even as the better things we now enjoy have come to us from the struggles of former years.” When E.M. Tiffany wrote those lines, there was no such day as National Ag Day but, National Ag Day 2019 may have merged the day and the meaning behind the line.

Governor Pete Ricketts signed a proclamation declaring it  Ag Week in Nebraska on Wednesday, March 13th. The  Governor signed the proclamation inside the Rural Radio Network Studios in Lexington.

Governor Ricketts and Director of Agriculture Steve Wellman following the signing of the Ag Week proclamation.

Listen to the Governor and Director of Agriculture here: https://post.futurimedia.com/krvnam/playlist/governor-ricketts-declares-ag-week-in-nebraska-6295.html

During the signing, Governor Ricketts urged Ag producers and Nebraska residents to prepare for the impending storm.

Even with meteorologists warning and the Governors urging,  producers could not know the upcoming storm would bring record low pressure. The pressure dropped so fast that it became what is known as a bomb cyclone.  Meteorologists refer to a strengthening low as “bombing” out if its minimum surface pressure drops by at least 24 millibars in 24 hours or less.  In just 13 hours, a bomb cyclone was seen in the Midwest.  As a result, Pueblo, Colorado had set a low pressure record on Wednesday.

By the morning of Thursday, March 14th, Eastern Colorado, Western Kansas and the Panhandle of Nebraska were under snow and heavy winds with blizzard like conditions. Eastern and Central Nebraska had heavy rains that swelled creeks and rivers. Flooding started to wash over roads and making travel dangerous.

The March 13th storm dropped heavy snow in the Nebraska Panhandle. NRRA Radio Station KNEB stayed on air throughout the storm. (Photo Courtesy of Bill Boyear)

Through all this, Ag producers worked to care for their livestock as best they could.  For numerous ranchers the storm hit during calving season. Susan Littlefield may have captured just how dire the situation was with her radio story, “In Their Own Words.” Littlefield spoke with Brooke Stuhr who ranches near Albion. Stuhr described how her husband worked through the night  and freezing rain to try and scrape pens. He then re-bed them so that the cattle would not be in knee deep in near freezing mud.

Listen to “In Their Own Words” here: http://bit.ly/2TPkGii

Stuhr’s story is similar to many producer’s across Nebraska, Kansas and Colorado who fought near white out conditions, more than a foot of snow, rain,  freezing rain,  and flooding. Ag producers truly struggled even with all their toil to try and prepare livestock and their property. They lost livestock, equipment, feed, and infrastructure like fence. This only marks the beginning as flood water recedes,  and the mud takes its place. Ag producers have a long road ahead. The mud will suck pickups and tractors in. The  mud will also be a harbinger of illness for newborn animals.

Photo: Beth Vavra captures this picture of her husband near Turkey Creek trying to bring cattle in from rising waters.

There are better days ahead though. The increased moisture will help green the grass when the weather warm ups. The silt from floods will deposit needed nutrients into productive bottom ground. The storm may have also showed ag producers how to better prepare and care for livestock in future storms.  It was National Ag Day and Ag producers celebrated by caring for their livestock and land. They knew that better days were ahead because of the current struggles.

For those that want to help those affected by the storm visit http://krvn.com/help-now/  .

Iowa State University researchers concluded from a long-term field study that poultry manure, when applied at a rate to meet crop nitrogen (N) requirements, can reduce nitrate loss and achieve equal or better yields in corn-soybean production systems. This research effort, Long-term Effects of Poultry Manure Application on Nitrate Leaching in Tile Drain Waters, evaluated tile drained field plots over 12 cropping seasons. While this research focused on nitrate (NO­3-N) loss by field-tile drains (typically placed 3 to 6 feet deep), similar trends would be anticipated in Nebraska for nitrate leaching below the crop root zone and the eventual impacts on ground and, possibly, surface water quality.

The research team evaluated four N treatments, including poultry manure application rates of 150 lbs N/acre (PM150) and 300 lbs N/acre (PM300), urea ammonium nitrate (UAN) at 150 lbs N/acre (UAN150), and a control at 0 lbs N/acre (Control) on a tile-drained field near Ames, Iowa from 1998 to 2009. Manure and UAN were typically applied on the same day, typically between mid-April and mid-May. The research was conducted in loam soils with organic matter averaging 3.4% in the top 12 inches. Nitrate-N loss was measured from mid-March to October.

Animal Manures Reduce Nitrogen Transport

Graph of the average (1998-2009) cumulative NO<sub>3</sub>-N loss in response to interaction effects of N treatments
Figure 1. Average (1998-2009) cumulative NO3-N loss in response to interaction effects of N treatments

Take Home Message:  Poultry manure applied at agronomic rates reduces loss of nitrate from the crop root zone as compared to commercial fertilizer and over application of manure.

Average cumulative nitrate-N loss for the UAN150 treatment was significantly greater than nitrate-N experienced by the PM150 treatment (Figure 1). In addition, over application of animal manure (PM300) increased nitrate-N movement to tile drains more than an agronomic rate of commercial fertilizer (UAN150) or manure (PM150). Nitrate losses were highest from March through June (periods of low evapotranspiration rates and high precipitation) and lowest from July through September (low precipitation, higher evapotranspiration, and deeper root zone).

Why? Several factors contribute to the reduced nitrate losses from manure substituted for commercial fertilizer. A review of 141 studies by Xia (et al., 2017) where manure was substituted for fertilizer identified three likely explanations:

  • Slow release of N stored in manure’s organic matter results in N release later in the growing season.
  • Rapid soil microbial growth resulting from manure’s carbon (energy for microbes) immobilizes nitrate-N early in the growing season. This microbial N is released later in the crop growing season.
  • Improvements in soil properties including water stable soil aggregates and cation exchange capacity hold soil mineral N in place.

Similar results for reduced leaching of N from manured fields were observed by Xia (et al., 2017) in a review of 141 manure versus commercial fertilizer comparisons. (See Does Manure Benefit Crop Productivity? Environment?)

Yield and Nitrogen Source

Take Home Message:  Poultry manure demonstrates equal or greater yields than commercial fertilizer when applied at similar N rates.

Manure and fertilizer treatments were applied prior to corn planting in plots maintained in a corn-soybean rotation. On average, corn yield responded to N as follows:

PM300 > PM150 = UAN150 > Control

Soybean yield responded to N as follows:

PM300 > PM150 > UAN150 > Control

Actual yields are summarized in Table 1. The authors state that “The findings from this long-term study show promising results for the use of poultry manure to reduce NO3-N leaching to tile waters and improve yields when compared to traditional UAN application.”

Table 1. Average crop yields1 as a function of N treatment, based on 12 crop-years for corn and soybeans.
Crop PM300 PM150 UAN150 Control
Corn2 177a 161b 155b 92
Soybeans2 52a 49b 42c 36
1Corn and soybean yields corrected to 15.5% and 13% moisture, respectively.
2Values followed by the same letter are not significantly different.

When Does Nitrate-N Leach?

The 12-year evaluation period produced results commonly expected for movement of water to tile drains. Distribution of rainfall during the growing season impacted both water flow and nitrate concentrations. For example, higher than normal precipitation during April and May resulted in higher than normal tile flow volumes, nitrate concentrations in tile flow, and nitrate losses. Wet and dry cycles of weather conditions also influenced annual tile drain water volume and nitrate losses. Limiting the nitrate-N pool in the soil during the spring (when water movement beyond the root zone is common) is important to protecting water quality. Animal manure can achieve this outcome.

The authors also noted that land application of poultry manure according to recommended N rates is an environmentally preferable source of N compared to UAN (and likely other common commercial fertilizers). However, the author’s noted that at the currently accepted N application rate for both UAN and PM, “NO3-N concentrations measured in tile drainage outflow exceeded the EPA requirements for safe drinking water.”

Does This Apply to Nebraska?

Take Home Message:  Poultry manure applied at agronomic rates reduces loss of nitrate from the crop root zone as compared to commercial fertilizer and over application of manure.

The general trends observed by this Iowa study would be expected for leaching losses of nitrate-N from Nebraska corn and soybean fields. Risk of nitrate-N losses is highest prior to planting and during the early growing season. Low evapotranspiration rates, higher precipitation, and the presence of nitrate-N is a recipe for N loss in drain tiles in Iowa and leaching to groundwater in Nebraska.

Similar results are also anticipated for most animal manures. Most slurry and solid manures store much of their N in a slow release organic form and supply sufficient carbon for rapid soil microbial growth following manure application. These properties are important to a fertility product with less risk of N leaching.

David Merrell from St. Edward Nebraska talks about the need for E15 year round in the United States.


Dave Warner from Albion Nebraska talks on the USMCA & its effects on Nebraska agriculture.


Image result for lynn crisp ncga president

2019 NCGA President Lynn Crisp
CLICK HERE TO LISTEN TO THE PODCAST


Andy Groskopf talks about attending his first Classic & his role on the Corn Board


Ted Schrock who is a NCGA Delegate talks about GMO’s & E15


Brandon Hunnicutt talks about the importance of Commodity Classic.


Dan Wesely – President of the Nebraska Corn Growers Association talks about new uses at Commodity Classic.


Ag Secretary Sonny Perdue talks about having all aspects of Ag getting along.

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LINCOLN, Neb. (AP) — Experts are concerned about the potential threat posed to Nebraska agriculture by an invasive worm from Asia.

The Asian jumping worms can deplete soil of nutrients, damage plant roots and alter the soil’s capacity to hold water. They’ve been confirmed in several states, including Nebraska’s next-door neighbor, Iowa, last year.

It’s unclear how or when the species, which has historically called Japan and the Korean Peninsula home, arrived in the United States. Experts think it likely was brought by boat in a plant shipment.

The worms move fast, like snakes, and appear to be jumping when disturbed. They’re sometimes called “Alabama jumpers” or “crazy snake worms,” can reproduce without fertilization and are popular as fish bait.

The peril for plants? The jumping worms don’t provide channels for plants to take root as other worms do as they move through the soil, and their excreta isn’t easily accessible for plants that use it for its nutrients.

“All it’s doing is it’s breaking down that top layer” of soil, Allison Zach, coordinator of the Nebraska Invasive Species Program, told the Lincoln Journal Star .

“These worms eat so much that all the invertebrates die off, and that goes up the food chain,” she said.

Oregon State University professor Samuel Chan, who’s studied the worms, said it’s difficult to determine what financial impact the worms could have on Nebraska’s agriculture, given that they would be a relatively new invasive species in the state.

Zach said the worms have the potential to affect agriculture because as they break down leaf and plant litter it changes the carbon-nitrogen ratio in the soil, which can cause pesticides to be less effective to protect crops from pests. She also said the worms’ activity will increase soil erosion, which could remove nutrients from ag fields.

She urges people who think they’ve spotted one of the worms to call the Nebraska Invasive Species Program at 402-472-3133 or report it through a website, www.neinvasives.com .

Nebraska agricultural property taxes are among the highest in the United States. Over the last three years, Nebraska farmers and ranchers have paid nearly 31 percent of their net farm income as property taxes (47 percent in 2017). When state and federal taxes are factored in, this represents an effective tax rate of more than 50 percent (over 60 percent in 2017). While no one particularly enjoys paying property taxes (or any other tax), property taxes are especially burdensome for Nebraska farmers and ranchers.

The proposed 2020 constitutional amendment to provide property tax relief would require dramatic state spending cuts, equally dramatic state sales and income tax increases, or both. This newsletter provides an introduction to the role of property taxes in financing state and local government in Nebraska as well as K-12 education. We then examine some of the major property tax relief proposals and how they might impact taxing and spending in Nebraska.

Nebraska ag land property tax crunchNebraska property taxes on agricultural land as a percentage of net farm income are 146 percent of the United States average (1950-2017 data). This means that for every $1.00 of agricultural income that United States farmers and ranchers pay on average for property tax, Nebraska farmers and ranchers pay $1.46, or almost one and a half times as much. So Nebraska agricultural property taxes are significantly higher than what most United States farmers and ranchers pay. And it has gotten worse in recent years: the 20- year average is 150 percent, the 10-year average is 147 percent, the 5-year average is 164 percent and the 3-year average is 188 percent.

Role of property taxes in NebraskaProperty taxes are the single largest tax paid in Nebraska, accounting for 38 percent of total state and local tax collections. Sales taxes are 29 percent of total taxes, and income taxes are 26 percent. Sixty percent of property taxes go to K-12 education funding. All property taxes fund local government–cities, counties, and local school districts. All income taxes and 84 percent of sales taxes are used to fund our state government.

Balancing tax sources? One public finance approach suggests that the tax load is fairest if it is evenly spread across the types of taxes collected. This suggests that the amount of revenue raised by property taxes, sales taxes and income taxes should be roughly about the same. If Nebraska property taxes, sales tax and income taxes were equalized as sources of state and local revenue, property taxes would need to be re­duced over $600 million, sales taxes would go up about $200 million and income taxes would increase around $400 million. While maintaining exactly equal shares among the different taxes would be impractical, moving towards a more equal shares approach would probably strike many taxpayers as being fairer.

How high are Nebraska taxes? One way to evaluate this is to compare Nebraska’s taxes with those of other states. In a national comparison, Nebraska property taxes are the 10th highest in the United States; sales taxes are the 9th lowest, income taxes are in the middle (26th out of 50) and the overall tax burden is also in the middle (24th out of 50) (Tax Foundation 2019 business climate study). One reason Nebraska sales taxes are relatively low is that we do not tax services, while many other states do.

How about school taxes? According to United States Census Bureau statistics (2014-15 data), Nebraska state school aid is the twelfth lowest in the United States, while the local share of K-12 school spending (property taxes) is the second highest. This suggests that property taxes may be bearing too large a share of public education costs and that some of these costs should be shifted onto sales and income taxes.

2018 property tax relief petitionThe 2018 property tax relief petition would have given ag and residential property owners refundable state income tax credits for 50 percent of their property taxes that went for K-12 education, or about 30 percent on average. Paying for the property tax credits would have cost $1.1 billion or 25 percent of the state general fund budget. The 2018 property tax relief initiative would have given many homeowners several hundred dollars of state income tax credits and ag property owners state income tax credits of several thousand dollars. An expanded version of the 2018 property tax relief petition will likely be on the November 2020 ballot if property taxes are not addressed by then.

Below are estimates of how the “property tax refund” would have been calculated for representative residential and agricultural taxpayers if the 2018 property tax relief petition had been approved by voters. The basic formula is taxable property value times property tax rate times 30 percent (half of the 60 percent of property taxes that went for schools). Rural property tax rates are lower because they do not include city property taxes.

  • $150,000 house x 1.6% x .3 = $720 refund
  • $2.5 million farm x 1.2% x .3 = $9000 refund

If the 2018 property tax petition had been on the November 2018 ballot and enacted by voters, the Governor and state legislators would now be debating how to pay for the $1.1 billion of property tax relief. Likely sharp state spending cuts and steep sales and income tax increases would have been needed to deal with the $1.1 billion state budget gap. To help bring this into focus, Governor Rickets correctly observed that in order to close the $1.1 billion budget gap, state spending could be reduced the needed 25 percent by shutting down all state agencies and also by cutting the University of Nebraska state budget in half. If the budget gap were closed by increased taxes alone (no state spending cuts), sales and income taxes both would have increased about 24 percent. There is no magic way to accomplish property tax relief of this magnitude without either increasing other taxes substantially, substantially reducing state and local spending or both.

State spending overviewState aid to K-12 education is $1.3 billion, 29 percent of Nebraska’s General Fund annual spending; the largest single state expenditure category. Even though Nebraska is low relative to most other states regarding the state’s share of total public school costs, state school aid is nonetheless the single largest element in the state budget. The remaining state budget categories and amounts are:

  • Medicaid-CHIP $856 million, 19%
  • State aid to individuals $803 million, 18%
  • Higher education $730 million, 16%
  • Law enforcement/public safety $501, million, 11%
  • Other state agencies $160 million, 4%
  • State aid to local governments $98 million, 2%
  • Total: $4.456 billion

State school aid distribution. How state aid is distributed to school districts across the state affects local property taxes. There are two principal components to the Nebraska state school aid distribution formula: equalization aid and foundation aid. Equalization aid refers to state aid to school districts with lower per-pupil property tax valuation. This is also called “need-based” aid. Foundation aid is equal to per-pupil state aid across the board, without regard to the amount of per-pupil property tax valuation. Currently, with high ag land values across the state, 85 percent of state aid goes to non-agricultural areas and 15 percent is distributed across the board to all school districts. Two-thirds of Nebraska school districts (largely rural) receive little or no state aid. Some state senators would like to rebalance the state school aid formula so that 50 percent is need-based and 50 percent is across the board. This state aid shift would move about a third of the current state school aid away from urban schools to rural schools.

Spending cuts or tax shifts? One reason we have not achieved property tax relief in Nebraska is due partly to different political philosophies on how best to accomplish it: through spending cuts or through a tax shift? The spending cuts approach would pay for property tax cuts by cutting state and local spending. The tax shift approach would pay for property tax cuts by expanding the Nebraska sales tax base to include services and using that new revenue for property tax relief. This philosophical stalemate has resulted in property tax policy gridlock. One reason Nebraska sales taxes are relatively low compared to other states is that we don’t tax services and many other states do. This type of tax shift may be the only realistic way to pay for the level of property tax relief that could head off a 2020 property tax relief ballot petition. But increasing sales taxes has historically been opposed by business and consumer interests, who are likely to continue their opposition. So there is no easy answer here.

Political economicsPretend you are a political consultant to a group seeking reduced property taxes. How would you advise your clients? If the objective is to find–say–$600 million dollars in property tax relief, your strategy would likely include a state school aid shift and a tax shift. The state school aid shift would change state aid distribution from 85 percent equalization-15 percent across the board to something like 50 percent equalization-50 percent across the board. This would move $300-350 million in state aid away from urban schools to rural schools. The tax shift would expand sales taxes to untaxed goods and services and use the increased revenue for property tax relief. Current sales tax exemptions, and the amounts of sales tax revenue each exemption would generate, if not exempted, are listed below.

$198 million: physician services

$194 million: purchases by non-profits

$183 million: motor fuels

$166 million: groceries

$164 million: Rx, home health care Rx

$63 million: legal services

$41 million: dentist services

$33 million: real estate agent services

$20 million: other outpatient services

$19 million: motor vehicle cleaning, repairs

$16 million: pet services

$13 million: home repair etc. services

$11 million: personal grooming services

$8.6 million: moving and storage services

$7 million: accounting services

$7 million: chiropractor services

$6 million: investment advice

$4.5 million: mental health services

$4.4 million: optometrist services

$4 million: other personal services
(weight loss, tattoos,  funeral and cremation, etc.)

$2.6 million: dry cleaning & clothing repair

$2 million: travel agencies

$1 million: transportation services
(taxis, limo rentals, etc.)

About $1.2 billion in total

 

A quick review of these figures suggests that the largest sales tax exemptions are among the most popular (medical expenses, gasoline, groceries), while more of the less popular exemptions (perhaps junk food, haircuts and beauty salons, weight loss clinics, dry cleaning, etc.) would yield much less sales tax revenue. Every sales tax exemption has its defenders who would likely oppose losing their exemption to help fund property tax relief efforts.

Other optionsConsider reforming business incentive programs ($360 million in 2016); increase state income taxes (currently about $400 million below what roughly equal revenue from property, sales and income taxes would be).

Major 2019 Bills

Property tax relief will be a high profile issue in the 2019-2020 legislative sessions. Some tax shift opponents have been term-limited out of the Unicameral, although Governor Ricketts is a tax shift opponent. We will take a quick look at some of the major property tax/school funding proposals before commenting on the obstacles to property tax relief in the 2019-2020 sessions, as well as the potential impact of enacting the 2020 property tax relief ballot initiative.

LR3CA, introduced by Sen. Steven Erdman (Bayard), would amend the Nebraska Constitution to establish refundable state income tax credits of 35 percent of the taxpayers’ total property taxes paid. LR3 would likely cost around $1.4 billion, 31 percent of the state General Fund budget. LR3 would create a major state budget crisis to fund through state spending cuts and tax increases. ­LR3 is what the Governor and state senators have two years to try to avoid by adopting significant property tax relief before the November 2020 general election.

If LR3 were enacted, this is how taxpayers’ “property tax refunds” would be calculated:

$150,000 house x 1.6% x .35 = $840 refund

$2.5 million farm x 1.2% x .35 = $10,500 refund

The Governor’s plan includes (1) increasing state property tax credits $51 million annually; (2) adopting a proposed con­sti­tu­tional amendment to limit pro­perty tax in­creases to 3 percent per year; (3) adopting an income capi­talization rate for agricultural land to lower property tax valuations, and (4) increasing state school aid around $52 million per year.

LB314, introduced by Sen. Tom Briese (Albion) was developed by Nebraskans United, which includes agricultural, education and public health representatives. LB314 would impose sales taxes on candy, pop, bottled water, home remodeling, haircuts, and auto repairs. The bill would also in­crease the state sales tax rate one half cent, increase cigarette taxes $1.50/pack, triple beer and alcohol taxes, and remove most state income tax itemized deductions (but not for medical expenses). LB314 would provide $510 million in property tax relief, and would increase state school aid by $236 mil­lion. LB314 is the only major proposal with an urban senator co-sponsor, indicating at least some urban support for the bill.

LB695, introduced by Sen. Mike Groene (North Platte), would change the state school aid distribution formula to guarantee $3500 of state aid per pupil to every school district.

LB497, introduced by Sen. Curt Friesen (Henderson), would give every school district 50 percent state aid. The bill would lower ag land valuation for school taxation from 75 percent to 40 percent over time and would limit school spending increases. LB497 would provide $523 million in new revenue, including sales taxes on groceries, house cleaning and vehicle repairs, as well as in­creased taxes on tobacco and alcohol.

Other tax and school funding bills have been proposed. The bills will be heard in committee in February and March. The bills making it out of committee should reach the floor sometime in late March or early April. The floor debates will be robust, contentious, and headline news for as long as they continue.

Discussion. Senators Briese and Friesen have both proposed controversial bills that would provide substantial property tax relief at a level that would have a fighting chance to head off a 2020 property tax relief ballot initiative. Their bills also provide funding for the property tax relief through (1) a state school aid shift and (2) a tax shift onto sales taxes. One or both bills are likely to be advanced out of committee to floor debate in March or April. So there should be enough time to give these important property tax relief proposals a meaningful legislative debate.

It will take several urban votes to enact any property tax relief proposal: 33 votes are needed to overcome a legislative filibuster, and 30 votes are needed to override a gubernatorial veto. To obtain this urban support, some of the state aid lost by urban districts in any state aid shift will need to be made up at least in part.

The LR3 property tax relief initiative petition basically gives the Unicameral and Governor this year and next year to adopt a property tax relief program. If they don’t, they will leave the door open for voters to give themselves a 35 percent property tax cut, something many voters would be eager to do. And Governor Ricketts and the 2021 Unicameral would have a historic state budget crisis to solve.

Property tax reform will not be easy or straightforward. A major issue is whether consumers are willing to pay higher sales taxes in order to receive property tax relief. Some will and some won’t. It would be best to have school funding issues resolved in the Unicameral instead of at the ballot box. But if the Unicameral remains deadlocked on this issue, voters may choose to have the final word.

BNSF Railway Company (BNSF) announced that its 2019 capital expenditure program in Nebraska will be approximately $140 million and will remain focused on maintenance projects to ensure BNSF continues to operate a safe and reliable rail network. The largest component of this year’s capital plan in the state will be for replacing and upgrading the main components for the tracks on which BNSF trains operate including rail, rail ties and ballast.

The 2019 maintenance program in Nebraska includes approximately 1,290 miles of track surfacing and/or undercutting work as well as the replacement of about 55 miles of rail and about 130,000 ties. BNSF has invested more than $880 million to expand and maintain its network in the state since 2014.

“Maintaining a strong infrastructure in Nebraska ensures that the state’s economy continues to grow by linking it to markets around the globe,” said Leif Smith, general manager of operations, Powder River Division. “Providing a world class rail service is critical to meeting our customer’s demands.”

The 2019 planned capital investments in the state are part of BNSF’s $3.57 billion network-wide capital expenditure program announced earlier this month. These investments include roughly $2.47 billion to replace and maintain core network and related assets, approximately $760 million on expansion and efficiency projects and about $340 million for freight cars and other equipment acquisitions.