Rural Nebraskans forked over a bigger share of their money to cover property and state income taxes compared with their urban counterparts in recent years, a new report says.
An analysis by the officially nonpartisan OpenSky Policy Institute found that additional property taxes paid in counties with 60 percent or more agricultural land far outweighed the slight income tax savings in those areas.
In addition, the report found residents of heavily rural counties paid more than $1,000 more per person than those living in urban areas in 2012, the most recent year for which data is available.
“Many believe that Nebraska farmers and ranchers pay little or no state income taxes and that balances out the fact that they pay more in property taxes,” Open Sky Executive Director Renee Fry said in a news release. “But this analysis shows an imbalance that has rural Nebraskans paying more taxes than urban residents in recent years.”
The report, released Monday, comes two days before the state Legislature convenes for its 2015 session. Property taxes are near the top of many state lawmakers' lists of campaign promises, and on the mind of Gov.-elect Pete Ricketts.
"Data and facts should drive the discussion, and the data is there to back the rhetoric," said Jessica Kolterman, a lobbyist with the Nebraska Farm Bureau, which considers property tax reform its No. 1 issue and endorsed Ricketts after last year's primary election.
OpenSky's findings place the Lincoln-based group — which includes Republicans and Democrats on its board — directly at odds with those pushing for income tax cuts, it says.
That includes the Omaha-based Platte Institute for Economic Development, a fiscally conservative think tank that introduced a plan in the fall to cut income taxes. The Platte Institute was founded by the governor-elect, but Ricketts is no longer affiliated with the group.
"If Nebraska heeds the calls of some and cuts income taxes, these fiscal issues and rural-urban tax disparities are likely to be exacerbated," OpenSky concludes in its report.
The analysis compared tax data from the five counties with the lowest percentages of agricultural land — Douglas, Lancaster, Sarpy, Hall and Scotts Bluff — with similar data from 49 largely rural counties.
Between 2003 and 2012, the value of agricultural land more than doubled statewide, the OpenSky report says. And as land values increased, so did property tax bills.
"It was once true that urban Nebraskans generally paid slightly more per person than rural Nebraskans, but this situation reversed around 2007," the report says.
The findings echo those from months of study by the last Legislature's Tax Modernization Committee, said Kolterman.
"At that time, ag land owners made up 3 percent of population, paying about 24 percent of property taxes," she said, citing 2012 figures.
Now ag land owners pay about 26 percent of property taxes in the state, she said.
"It's moving in the wrong direction, from our perspective."
Efforts to ease the rural property tax burden, such as reducing the taxable valuation of agricultural land to 75 percent, haven't helped enough, OpenSky says.
"Our current tax imbalance that has rural Nebraskans paying more in combined property and income taxes has caused problems regarding fiscal issues like school funding," the report concludes. "Our agricultural producers have seen their share of our K-12 bill increase along with the rise in their property taxes."