KEARNEY — A property tax bill currently being discussed in the Legislature’s Revenue Committee has some school board members worried about its effects for the Kearney Public Schools.
Under LB974, property tax values over time would be decreased for the purpose of taxes levied by school districts, reducing the district’s property tax revenue.
Residential and commercial property eventually could be taxed on 85 percent of its actual value for school funding only, down from the current 100 percent, according to reporting from the Omaha World-Herald. Farmland valuations would drop from the current 75 percent to 55 percent.
Though the bill is aimed to reduce property tax burdens for landowners across the state, KPS board members at Monday night’s meeting expressed concerns about the bill’s implications for the local budget.
“If that bill passes ... that’s really going to hurt Kearney Public Schools,” said board President Kathy Gifford.
She said 27 percent of the land in the KPS district is agriculture land, which puts the district in a unique position for its size.
In the 2019-20 school year budget, 66 percent of the general fund revenue — or $39 million — is provided by property taxes.
LB974 is set up to reduce the percentage of taxable land value each year until 2022, meaning by then, KPS would be down millions in property tax funding.
The bill has yet to achieve a final form and at this point has a concession to make up for lost property tax revenue with aid from the state.
However, Gifford said, “Where that ... aid is going to come from, nobody seems to really know. So it’s really a guessing game as to whether that will be made up at all.”
Even though valuations may be lower, if the district does not have revenue to support its budget, it may need to increase the levy to make up the deficit.
KPS’s current levy is $1.22 per $1,000 of assessed valuation. Last year’s KPS general budget was $58,197,793. “That’s pretty frugal for us,” Gifford said of the budget.
While there are many uncertainties about the property tax relief bill, board member Alex Straatmann noted the bill may be the opportunity to fix school funding issues.
“TEEOSA (the current formula Nebraska uses for state aid) was originally passed to equalize the rural districts and make sure the rural districts had state aid. Now, under TEEOSA, you have a third of our districts or more that don’t have state aid,” Straatmann said. “I’m hopeful that (the Legislature) can do something, because the status quo, as anyone on the board will tell you, it’s just not sustainable.”
Gifford agreed there are issues with property taxes in Nebraska.
“It’s not that I want the property taxes to stay where they are ... I don’t want our ag economy to have to stay carrying all of that burden. That’s terrible. My family is in the farming industry,” she said. “But I don’t know where we find that balance.”
Also at Monday night’s meeting, the school board:
- Accepted bids for a new propane school bus for $101,205 from Nebraska Central Equipment of Grand Island and three 10-passenger vans from Platte Valley Auto Mart of Kearney for $89,871.
- Approved an upgrade to the district’s firewall system. The upgrade will cover two devices and five years of support, at a total price of $162,622.58.
- Approved increases in total compensation for employees in the district; with an average of 5 percent for classified employees, 3 percent for classified/exempt directors, 4 percent for other classified/exempt employees and 3 percent for administrative staff. The board also approved the negotiated agreement with the Kearney Education Association outlining contract terms for the 2020-21 school year.