Senator Dan Hughes

6-20-18

This week I want to explore further the property tax problem we have in Nebraska. One of the main problems is how we value property. Some have been talking about going to an income producing method of valuing real estate for taxation purposes.  Some of our surrounding states are using that method currently and Nebraska has used it in the past. During my visits with county assessors, I usually ask them about making that change. Most of them have asked me “please do not go back to that method”. It is much too cumbersome and there are way too many subjective decisions that can be made on any property.

Sales is not a perfect way to determine value but it is simpler and less subjective. Besides, whatever method you use to determine value, there is still an arbitrary number plugged into the equation to come up with the amount of taxes needed to fund our government. Currently, Nebraska taxes agricultural land around 75%, of recent sales determined values, and residential and commercial properties at not less than 95%, of recent sales determined values. With the income-producing method, there is a capitalization rate which is an arbitrary number plugged into the formula to give the values necessary to raise the amount of taxes needed to fund our government. One of the biggest complaints I receive is when someone’s neighbor sells their property, causing their property value to escalate and causing taxes to go up. On average only two to three percent of agricultural land sells in any given year, and based on a three-year rolling average, we are allowing over 90 percent of our values to be determined by less than 10 percent of sales. The same thing happens with residential and commercial properties but using a different time frame. Why should you have to pay more in taxes just because someone else chose to pay an inflated price for a piece of property in your vicinity? That inflated valuation does you no good unless you are willing to sell. Most of the time that is not an option.

I would like to see our valuations frozen at today’s levels, then if someone wants to pay an inflated price for a piece of property, they can without it causing all of the neighboring properties valuations and ultimately taxes to go up. The price paid for the selling property would be the new value for it, but all surrounding properties values would not change for taxation purposes. We will also need to decrease the percentage that agricultural land is taxed at, to bring balance back to our revenue streams.  If we did freeze valuations we would still need to make some adjustments annually in valuations to keep them uniform and proportional and to ensure our schools and counties could still have a modest increase in revenue if needed. Our property tax issue is very complicated in Nebraska. There are cause and effect issues with everything the Legislature tries to do to solve the problem.

6-6-18

We have been hearing, and having, a lot of discussions about property taxes over the past several years. Nebraska taxes real estate and improvements on those properties at a higher rate than our neighboring states. There are several reasons why that is the case, but I would like to examine why we tax real estate in the first place.

Starting over 150 years ago when Nebraska first became a state we had little commerce for sales tax revenue and no state income tax was in place. The only revenue stream available for the state to raise money for the operation of government was the taxation of real estate. Taxing real estate was and is relatively easy because the legal descriptions of every parcel of real estate are recorded and tracked in our local courthouses. Now, 150 years later, we have billions of dollars of commerce which we pay state and city sales taxes on. Each transaction gets an additional percentage added on and is remitted to the state and cities as a revenue stream. This stream has been steadily drying up over the years because the legislature has granted sales tax exemptions for certain things and with the popularity of internet shopping, the amount of commerce that sales taxes are being collected upon has decreased.

Nebraska has currently exempted about half of the things that are taxed in other states. Now, I do not necessarily disagree with reducing the amount of money the government has to spend. Most everyone will agree, the government is inefficient by its very nature and waste of taxpayer dollars happens regularly. My concern has always been that whenever the state runs short of revenue it cuts state spending and does not reduce mandates on local governing bodies correspondingly. Thus, forcing our local school boards and counties to increase the number of dollars required from local real estate taxes to make ends meet. Eroding our sales tax base and forcing state aid cuts upon school boards and counties is something the Legislature has done for years with little pushback from the citizenry.

Until now, we have had a relatively balanced stream of revenue to fund the government with about one third each coming from income, sales, and real estate taxes. With the recent jump in agricultural land values and the current escalation in home values, the real estate portion is taking on more than income and sales, and thus has thrown the balance off. To be more fair we must find a way to lessen the reliance on real estate taxes. I do not believe we can reduce the spending of our real estate tax revenue to bring our three-legged stool back into balance. I think we must look at reducing spending and expanding our sales tax base in order to bring our government spending back into balance. As I stated at the beginning of this week’s article, we need to examine how and why we tax real estate and I plan to continue that discussion in my subsequent articles. Plus, I want to begin the philosophical debate of, should we even be taxing certain classes of real estate. Stay tuned.

5-23-18

Things in Lincoln have slowed down considerably since the end of session last month. This week I would like to update you on a major renovation to your state capitol. Over the next eight or more years, the capitol will be under construction. We will be updating the old heating and cooling system with a new HVAC unit, as well as, repairing and fixing the windows. The new HVAC system will be geothermal and powered by wells drilled on state property just a few blocks away from the capitol. This new system will eliminate the need of using chilled water and steam delivered by underground pipes from the University of Nebraska city campus, to cool and heat the building.

The remodeling will start in early June and will be completed in four separate phases. One quadrant will be blocked off at a time while workers install the new system. The southwest quadrant will be the first to undergo construction. Senators and staff on both the first and second floors of that quadrant will be relocated into the tower or to other available offices in the building. All committee offices and hearing rooms will be located on either the first or second floors somewhere during the entire time of the renovation. My office is in the southeast quadrant and will not move during the first phase. The southeast quadrant renovation is scheduled to begin in June of 2020. Each phase is expected to take from 18 months to 2 years.

The HVAC system will bring a new and nicer way to heat and cool the building. Every office will have its own thermostat to control the temperature in their room. Even though the building will be receiving a new upgrade it will come with some challenges. With senators’ offices being located temporarily in the tower, it may cause issues during session. The elevators are slow and can only hold a small number of people. Staffers and senators trying to get to the floor for a vote or with information may take some extra time. Some senators’ offices will be located as high as the 13th floor. Even with some inevitable speed bumps, the finished product will be worth it. Currently, it takes a couple of weeks for the entire capitol to be switched from heating to cooling which can cause some cold days in winter and warm days in spring.

I always enjoy hearing from the Nebraskans I represent. As I have done in previous years I will be spending this summer attending community celebrations and county fairs throughout the 44th District as well as meeting with various local officials. If you do not catch me when I am in your community please feel free to contact my office with any questions or concerns that you might have. My email address is dhughes@leg.ne.gov and my phone number is (402) 471-2805. You can read more about bills and other work of the Legislature at www.nebraskalegislature.gov.

5-9-18

  On April 11th my priority bill, LB 1009, was passed by the Legislature. This bill authorizes the Nebraska Department of Transportation to increase highway speed limits. The speed limit can be increased by a maximum of 5 mph on two-lane highways, four-lane divided highways that are not part of the state highway system, expressways and freeways that are a part of the state highway system, and on portions of highways in Douglas, Lancaster and Dakota counties. Originally the bill would have allowed for certain stretches of I-80 to be raised to 80 mph. This was taken out of the bill during debate on the floor of the legislature. There was some push back from the truckers association during committee hearings on the bill which resulted in this being eliminated. There were some safety concerns about onramp lengths and being able to reach the appropriate speed before merging in with traffic. After July 19th you will see some of the speed limits across the state change. This will not all happen at once, the speed limit posted will remain the legal limit until the signs are changed.                         

  LB 449 was vetoed by the governor on April 23rd.  This bill would have repealed the Black-Tailed Prairie Dog Management Act. I along with other senators fought this bill throughout the process. I am glad the governor vetoed the bill.  Prairie dogs are pests to farmers and ranchers and can cause extensive damage to crops and rangeland. Currently only one county has adopted this act, but it is important to keep this law in place in case more landowners in other counties need help with controlling these rodents.  Allowing the counties to use the law as leverage, if needed, can help solve problems in the future on this issue.       

  Over the interim months I will be looking at ways to help make this law better. I would like to keep the act on the books, but there needs to be a few things defined more clearly in statue. The petition drive for 50/50 property tax relief was suddenly abandoned a few weeks ago. We must find some form of property tax relief for our state. With this option being abandoned the issue will most likely not be addressed until session next year. The call for a special session to address property tax relief was also unsuccessful. We needed an additional 20 senators to sign on and that didn’t happen. I am still looking for a path forward for property tax relief and will be asking many of you this summer and fall for your input.    

    I always enjoy hearing from the Nebraskans I represent. Please feel free to contact my office with any questions or concerns that you might have. My email address is dhughes@leg.ne.gov and my phone number is (402) 471-2805.You can read more about bills and other work of the Legislature at www.nebraskalegislature.gov, and you can click on the Live Video Streaming NET logo to watch sessions, hearings, and other Capitol events.

4-25-18

The legislature has adjourned Sine Die for the 105th Nebraska Legislature Second Session as of April 18th. This was the final year of my first term as a state senator. I enjoyed my first four years in the legislature serving the people of the 44th district. This week I would like to give an update on some of the key legislation that I carried that will directly affect you in southwest Nebraska. I have mentioned these bills in my past articles, but would like to give a final update on LB 758, LB 1008, and LR 266.

LB 758 allows the four NRDs that own the N-CORPE project in Lincoln County and the Upper Republican NRD that owns the Rock Creek project in Dundy County, to make payments in lieu of taxes. LB 758 was passed by the legislature and signed by Governor Ricketts. The bill had an emergency clause attached which means it is currently law. This is an important bill for the 44th district because it ensures the local school districts and counties will continue to receive property tax dollars, even if TERC were to rule against it.

LB 1008 was a “Christmas tree bill”, which means the committee had rolled multiple bills together into one. LB 1008 contains bills to raise liquidated damages on poachers for certain game violations, raise the per diem for Oil and Gas commissioners, give the Power Review Board authority to assess a fine, extended the sunset date for the state’s scrap tire program, and also resolves a problem for public power. This bill contained three of my own bills, these are important issues that face southwestern Nebraska. The biggest of which will allow public power generators to keep their daily cost of generation information from being disclosed to their competitors.  LB 1008 was delivered to the Governor, and signed into law on April 11th.

LR 266 is a resolution urging the United States Department of the Interior, Bureau of Reclamation, Nebraska Game and Parks Commission, as well as, Nebraska congressional delegation to work together. We need to a find a solution that allows the people occupying lots around Hugh Butler Lake, Harry Strunk Lake and Swanson Reservoir to freely transfer their permits and to leave non-permanent structures currently in place on existing lots. Currently, the Bureau of Reclamation is mandating that trailer home owners vacate the lots at the lakes no later than April 30, 2020. This would make for a total of 232 cabins and trailers to be removed. LR 266 was adopted on April 11th, and we will be passing this information along to the Nebraska Congressional delegation.

I always enjoy hearing from the Nebraskans I represent. Please feel free to contact my office with any questions or concerns that you might have. My email address is dhughes@leg.ne.gov and my phone number is (402) 471-2805.You can read more about bills and other work of the Legislature at www.nebraskalegislature.gov, and you can click on the Live Video Streaming NET logo to watch sessions, hearings, and other Capitol events.

4-18-18

As you all know the legislature has adjourned for the year. I am as disappointed as you, that we were unable to provide any tax relief. I have always stated that property taxes, especially agricultural and real estate taxes are way out of line. I was one of the thirteen senators who signed a letter to the secretary of state asking for a special session to deal with all property taxes. Unfortunately, I do not believe there are another twenty of my colleagues who are willing to join the call for a special session.

We have a situation today in Nebraska where our tax collections are out of balance and a majority of my fellow senators have no incentive to make a change with the current situation, because it is working to their advantage. Several of them have sympathy for the property tax issue but when it comes right down to it, the status quo is preferable to making some tough decisions.

We have three main sources of revenue to fund our government in Nebraska: income tax, sales tax, and property tax. For several years each of these revenue streams contributed about one third of the funds necessary to pay for the needs of our citizens. From roads to K-12 education to welfare to prisons to post-secondary education, the citizens of Nebraska pay for the things we demand through taxes. Over the last forty years we have been shortening the leg of the stool that represents sales tax receipts by exempting certain categories. Lately, online shopping has accelerated that revenue stream depletion as well.

In the past when the state ran short of money it was relatively easy to cut state aid to counties and schools in order to balance the state’s budget. The local property tax payers then had to make up the difference. When we talk about tax relief in the legislature the governor, several of my colleagues and the chambers of commerce cry, “we cannot allow a tax shift”. That statement rings pretty hollow since the shift has already occurred from sales to property, especially over the last ten years. Where was the cry then? It only came from those of us in agriculture who were paying an ever increasing percentage of the bill.

There is always room for efficiencies in government, and if government is run like a business, when revenue is short, you prioritize your spending. Property taxes are state taxes, but our local school boards and county boards are the ultimate deciders of how those dollars are spent. The budgets for our schools and counties are being developed and finalized as we speak. We have elected our neighbors to make those decisions for us and I know they always welcome input from their constituents on the budget. I encourage everyone to go to the school board meeting and the county commissioners or supervisors meeting and learn where the money is spent and then make suggestions where money can be saved. Learn the facts about our local budgets, offer constructive suggestions, and you may be surprised by your efforts.

4-11-18

This is the last week for this year’s legislative session as we will adjourn Sine Die on April 18th. My colleagues and I have worked hard these past few months on trying pass legislation that helps Nebraskans all across the state. I appreciate all the words of support you have given me during this session. I am proud to represent to people of the 44th district. This week I would like to update you all on the passage of the budget, as well as, an interesting bill that could replace the statues that represent Nebraska at the Capitol in Washington D.C.

In my article last week I laid out some of the reasons why LB944, the mainline budget bill, was having trouble getting passed. This week I am pleased to report that a compromise was found and we were able to send all the budget bills to Governor Ricketts’ desk. The amended version continues to prohibit the referral of a patient to an abortion service. A referral is limited to recommending a pregnant woman to doctors, clinics or other persons or entities for the purpose of obtaining an abortion. The governor signed all the budget bills into law on April 4th without any line item vetoes.

LB807 introduced by Omaha Senator Burke Harr would replace the two statues in National Statuary Hall in the United States Capitol. In 1864, congress established this hall and allowed each state to have two statues to represent their story. Currently, J. Sterling Morton and William Jennings Bryan are the two statues for Nebraska and were installed in 1937. This bill would replace those with Willa Cather and Chief Standing Bear. I believe it is an appropriate time replace these statues with two of Nebraska’s notable people. There is no cost to the state to replace the statues and the current statues will be returned to Nebraska.

I had the pleasure of having Reverend Johnny Walker give the prayer of the day of April 3rd. Reverend Walker is the pastor from West 1st Chapel in McCook. It was an honor to have another great minister representing our district give the morning prayer.

I would like to give another reminder to any high school students that would be interested in participating in the Unicameral Youth Legislature program that is held every summer. This is a wonderful opportunity for young students to get to see the behind the scenes of how the nation’s only unicameral works. Students participate in all the activities of a state senator and discuss issues important to the state. To learn more visit: nebraskalegislature.gov/education/unicamyouth.php

I always enjoy hearing from the Nebraskans I represent. Please feel free to contact my office with any questions or concerns that you might have. My email address is dhughes@leg.ne.gov and my phone number is (402) 471-2805.You can read more about bills and other work of the Legislature at www.nebraskalegislature.gov, and you can click on the Live Video Streaming NET logo to watch sessions, hearings, and other Capitol events.