As property valuations continue to rise across Nebraska, it is important to remember that increases in valuation directly impact the amount of property tax revenue generated by an existing levy rate. In simple terms, when valuations increase, maintaining the same levy will generally result in the collection of more tax dollars from taxpayers.
Elected officials at all levels of government, including members of the Legislature, have a responsibility to ensure the tax burden they impose on their constituents is not greater than needed to fund essential government services. This commitment is often tested by policies and events outside of our control. Low commodity prices, extreme drought, and historic fires are events that, taken individually, can significantly impact government
resources, spending, and the ability of taxpayers to absorb an existing, not to mention higher, tax burden. Together, these events create an extraordinary challenge for the people we are entrusted to serve.
Under Nebraska law, political subdivisions are expected to carefully review and adjust their levy rates each year to ensure that tax requests remain consistent with actual budgetary needs and statutory limitations. The levy should not simply remain unchanged when valuations rise if doing so would generate revenue beyond what is reasonably necessary for operations, reserves, and authorized expenditures.
Property taxes are calculated by multiplying the taxable valuation by the levy rate. Accordingly, when taxable valuations increase significantly, a political subdivision can often generate the same amount of revenue with a lower levy. Failure to reduce the levy in response to increased valuations may result in substantially higher tax burdens on property owners.
Nebraska’s property tax system is designed so that valuations and levy rates work together. Increased valuations are not intended to automatically produce windfall revenue for political subdivisions absent a deliberate budgetary decision to increase spending or reserves within statutory authority.
Political subdivisions should therefore carefully review annual valuation changes provided by the county assessor and determine the actual revenue necessary to fund the adopted budget. Where appropriate, levy rates should be adjusted downward to avoid unnecessary taxation and ensure compliance with Nebraska budget and levy limitation statutes, including applicable lid calculations and hearing requirements.
Transparency with taxpayers is especially important during periods of rapidly increasing valuations. Taxpayers often assume higher valuations alone are responsible for increased tax bills, when in reality the levy decision made by the governing body is equally significant.
Ultimately, elected officials have both a statutory and fiduciary responsibility to exercise sound judgment in setting levy rates and requesting only the revenue reasonably necessary for lawful governmental purposes.
As a member of the Legislature’s Appropriations Committee, I am keenly aware of our shared responsibility to budget wisely, spend prudently, and minimize the tax burden placed on our fellow Nebraskans. The combination of a challenging economy and natural disasters makes the need to minimize the tax burden even more relevant.
Rising valuations should not automatically result in higher property tax collections. They should prompt careful review, responsible budgeting, and honest communication with taxpayers about what revenue is truly necessary to provide essential government services.
At the state level, sliding tax revenues and structural budget challenges will require a similar approach and resolve to do right by the Nebraskans we serve.
As always, I appreciate your continued engagement on these important topics. If you have any feedback or concerns, please don’t hesitate to reach out. Your input is invaluable in shaping the future of our district and state. You can contact my office at (402) 471-2616 or by email at pstrommen@leg.ne.gov.