FAIRBURY - With this year's legislative session wrapping up, this week county government officials in Southeast Nebraska received a visit from a pair of important players in both local and statewide politics.

State Senator Tom Brandt and Jon Cannon, the executive director of the Nebraska Association of County Officials, dropped by the weekly board meeting of the Jefferson County commissioners this week.
In a week in which many Southeast Nebraska citizens, including the commissioners, received letters detailing changes to their property tax valuations, Senator Brandt reflected on a failed bill that would have provided $100 million in property tax relief...the issue this senator feels is the most important one his colleagues need to address.

The inheritance tax was another hot-button issue in the legislature this year. Cannon's organization of county officials across the state stood opposed to the plan that would give voters the option to eliminate the tax outright, saying county governments stood to lose a lot of their operating revenue should that tax go away. But NACO conditionally supported LB468, which devised a replacement revenue pathway to offset local losses, a bill that ultimately fell two votes short of advancing.

Among other issues discussed: the difficulties of balancing the state budget, the impact of consolidations of schools and county courts, and the fallbacks from ambulance deserts in rural areas.
The following is a readout with full quotes from this wide-ranging conversation. Some of the quotes have been truncated or reordered, but otherwise they have been reprinted in full:

---

On the inheritance tax

Brandt:

This thing kind of spun out of control. Senator [Robert] Clements, to his credit, has worked on this for five or six years, and he’s gone from just getting rid of it to finding other revenue...and I think by the time we got to the end of this we had 30% replacement revenue. I was pretty close to not voting for it, mainly because of increasing the nameplate capacity tax and sharing that with all counties. Our county has renewable energy resources, we shed a lot of blood to get those. It’s always a big fight, and the counties next to you put in these huge setbacks to make sure they don’t get any of this – I don’t want to see them get a nickel. They haven’t done a damn thing. Next time around, that won’t be in there. 

It’s very difficult and discouraging trying to find a solution to this. But I’ll give Senator Clements credit, he keeps pitching and looking for ideas on it.  

Cannon:

The thing we really hit upon last year was you can’t get rid of the inheritance tax unless you’ve got appropriate replacement revenue. We were several votes short, I think we probably could have killed the bill actually, but we didn’t want to take that chance. 

Generally speaking what we’ve talked about is we want those sorts of things that are sustainable, are fairly durable, and reflect the economy and are roughly analogous to the inheritance tax. And locally collected. And those are very important to us.

The way forward is we have to find replacement revenue that’s going to be adequate for counties. We’ve been offered to just do an appropriation to take care of the counties, and those appropriations are only good for one year, because you have to go back year after year after year. So the message that I’ve given people is, if you want to go the appropriations route, put it in the Constitution. And for some reason I get no takers. So what we have to do is we have to find adequate replacement revenue.  

 

On valuations and the property tax

Brandt: 

It’s time for Nebraska to look at using a cap rate on valuations, changing our Constitution so we aren’t using a sales-based approach to valuation. It’s the only way you’re going to fix valuation in this state. On the ag side, it seems to be working quite well for both Iowa and Kansas. The alternative is called a capitalization rate. We’re a border county [to Kansas], and their ag land owners pay about a third of what Nebraska does, and I think you see that particularly in that Steele City area. But their state does fund more of their schools, and Nebraska needs to do more of that.  

We did have a bill this year, LB170, that would have generated another $100 million in property tax relief. Unfortunately there were seven freshmen Republican senators that were against it, so we came two votes short. By and large it wouldn’t have cost most Nebraskans anything, unless you chartered jets, or rented limousines, or swimming pool cleaners, pop and candy tax was in there, we took all that out, just raised tax on tobacco and vaping – and if you didn’t smoke, that would have generated $75 to 80 million, and still we couldn’t get this thing across the line.

Of all the issues in my seven years, there’s only one: and that’s property tax. That’s it. We can get distracted on all these cultural issues, all the stuff that makes headlines, and granted, everyone has an opinion about that, but at the end of the day, I can tell you from where I sit, it’s just property taxes. 

Cannon:

I understand the need to talk about valuation, and it is a component of it. It’s a factor, but it’s not the driver – the driver has always been what we have to spend, the cost of government. At the end of the day, 60% of the property tax comes from the schools. Senator Brandt hits it right on the head: if we’re serious about property taxes in this state, we’re going to find a way of funding the schools in a way that satisfies everyone. There’s a question of if you’re losing local control if the state is funding a substantial portion of it. Whoever has the gold makes the rules, and if the state’s providing funding for sorts of things, the question always becomes, what sorts of strings are they going to attach to it? To me, that’s the biggest issue, and that’s the issue that has always been there: how do you properly fund schools? If we figure that out, that’s the whole shouting match right there in my opinion.  

 

On other taxes

Brandt:

We know that as you increase tobacco taxes, there’s more people that quit using it, but that goes over a period of time. Currently Nebraska is eighth lowest in the nation on tobacco taxes. And if we raise our a dollar, to $1.64, we’d still be in the bottom half of all the state on cigarette tax. I get “raise it” a lot, and I’m kind of surprised we couldn’t get the votes to raise it, but some of these freshman senators are all “No new taxes, cut spending.” OK, where do you want to cut? It’s the same question you guys run into when we have county meetings: do you want to cut roads, or do you want to cut the sheriff’s department?”  

 

On efforts to balance the state budget

Brandt:

The budget this year was painful. If the economy of the state does not improve, in two years it’s going to be really painful. We’re looking at a situation today where we have dropped income taxes from 6.85% down to 5.25% and in two more years it goes to 3.99%. There will be over $400 million in foregone income when that happens. So the economy needs to improve by $400 million just to break even. It could happen. We’ve cut budgets on all of our agencies...we’ve trimmed back pretty hard. It’s getting kind of skinny out there – we'll see what happens. We’re good for one or two years. But if the feds decide to increase what the states have to pay, it’ll come down to you [the county government].  

 

On school consolidations

Brandt:

We have 243 school districts in this state, and I’m not going to tell my small school districts they need to consolidate. If they consolidate a school district that’s got 150 kids in it with one next to it that has 700, their land taxes will go up. So that tells you, structurally, we are way out of balance in this state. What you’re seeing in rural Nebraska is there just aren’t any kids: the numbers that I’ve seen, every seven to 10 years that rural population is going to continue to decline, and that’s going to put tremendous stress on these schools. We’ve got to reinvent what we’re going to do with these schools. I don’t know that there’s any appetite at the state for forced consolidation, but I do believe at one time in the early 2000s the state did have a program to incentivize consolidation. But the problem we’re getting into is some of these districts are so large physically, geographically. A first-grader may have to ride the bus for an hour and a half. We’re pretty fortunate in eastern Nebraska where you’ve got choices, but there’s 27 counties in the state where there’s only one school district already.  

 

On ambulance service and deserts

County Commissioner Mark Schoenrock: 

Last time when I campaigned for reelection, that was the number one issue for our citizens – they said, whatever you do, make sure you keep that 24/7 advanced life support service. It’s like the emergency room coming to your house at two in the morning, rather than a volunteer crew having to come pick you up and take you to the nearest emergency room, which might be a 15 or 30 minute drive, depending on where you are, and that could be the difference between life and death. That’s about 20% of our county budget, but our citizens are willing to pay that because they value that service.  

County Commissioner Michael Dux: 

But it’s only paid by 60% of the people in the county.  

Brandt: 

Being one of the 40%, my constituents say we never want to be part of that. And if you didn’t have that, you would have the volunteer service, yeah, it might take a little longer to get there, but the end result, in most instances, probably would be the same. We have a real problem with EMTs: they’ve increased the certification requirements. We have rural fire departments giving up their ambulances because of these requirements. We need to loosen those requirements and create different categories. You take all 93 counties, there’s probably some deserts there where we have no coverage.  

County Commissioner Danielle Schwab:

My sister’s in the fire department, an EMT, in New York, and they can’t get anyone to volunteer because it’s so expensive to live. Volunteers are hard to get as things get more expensive, you’re working two, three jobs to live, then you don’t have time to volunteer.  

 

On voter-backed referendums that were adjusted by the legislature:

Brandt: 

There seems to be a perception that the people passed these things, and we’re changing them. What they fail to recognize is that the Nebraska Constitution says when you do a constitutional initiative, the legislature can change that with 33 votes. If they don’t want us to change it, make it a constitutional amendment. Then it’s in the constitution and the only way it can get changed is by a vote of the people.  

 

--

In separate but related news, later this week Schoenrock was recognized by NACO for earning the level one County Board Member Certification. 

"The NACO County Board Member Certification Program enhances the professional development of county board members, ensuring they are well-equipped to meet the challenges of their roles and provide effective governance for their citizens," according to a Friday release from NACO. "To achieve the level one certification, Commissioner Schoenrock completed 30 credit hours of educational workshops and training sessions over two years. Board members can upgrade their certifications every two year, supporting a continuous path of career-long learning."