A property tax reform proposal that would have changed the valuation of agricultural land to a productivity-based system was removed from the Legislature's agenda Thursday after three hours of debate.

It was the first major tax reform discussion of the 2019 legislative session and provided an early indication of how difficult it may be to reach the kind of overriding consensus that will be needed to enact fundamental change.

Speaker Jim Scheer of Norfolk said Sen. Steve Erdman of Bayard, sponsor of the proposal (LB483), will need to show him that he can garner the support of 30 to 33 senators in order to return the bill to the legislative agenda.

Erdman, who spent most of Thursday's afternoon session answering questions posed by senators who were skeptical about the potential impact of his proposal, said "I don't know" when asked whether he will attempt to revive his bill.

The proposal would change agricultural land valuations from the current market-based system to a system that centers on production capability and earning ability tied largely to the type of soil.

"This is not a bill for property tax relief," Erdman said. "And the goal is revenue-neutral."

However, a number of skeptical senators raised questions about the potential impact of the proposal and how it might affect other taxpayers.

Sen. Steve Lathrop of Omaha, who spearheaded the questioning, said senators need to be able to clearly understand the variables involved in making those changes in ag property tax policy.

At one point, Lathrop questioned whether some portions of the bill might raise constitutional issues.

Other senators raised concerns about the possible impact on property taxes paid by homeowners and on the state school aid formula.

"My goal is not to have ag pay less," Erdman said.

The bill would require that total ag land valuations in 2020 match total ag land valuations for 2019. Thereafter, ag land valuations would be governed by an eight-year average of commodity prices in an attempt to prevent sudden surges in valuations.

Erdman said his plan would be similar to those used in surrounding states, including South Dakota, where valuations are tied in part to soil classifications that help determine productivity.

That would align with the ag land's ability to produce income, he said.

Currently, Erdman said, ag land valuation is influenced or determined by a sale or two.

"If you want to keep piling on agriculture, keep the system we have," he told his colleagues.

Yet to come to the floor is an expected Revenue Committee proposal for tax reform that will center on property tax relief. That plan is still under construction within the committee.

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Reach the writer at 402-473-7248 or dwalton@journalstar.com.

On Twitter @LJSDon.


Political reporter

Don Walton, a Husker and Yankee fan, is a longtime Journal Star political and government reporter.

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