NTF Issue Paper: Property22. 5-08.

NEBRASKA TAXPAYERS FOR FREEDOM ISSUE PAPER:

PROPERTY TAX RELIEF.

INTRODUCTION. The following ideas are suggestions for both temporary and permanent property tax relief. See other NTF issue papers for additional information on property taxes.

OPTION 1. Legislators or citizens by initiative petition could pass a Proposition 13-type plan to reduce property taxes on residential, commercial, industrial, and agricultural property. Local property taxing authorities could not raise rates by more than a % of a property market value. Annual property tax bills capped at x% raises. Proposition 13 uses market value or purchase price as a basis for taxation. Thus, owners of like homes or businesses could have varied tax bills. The system does favor owners who have lived in or used their properties for a longer time. Even with a limit on valuation increases, a home current value could greatly surpass its taxable value in only a few years. Yet, Prop 13 treats equally property owners who buy property of similar value at the same time. It gives absolute certainty to homeowners about their tax bill amounts in all future years. One can buy or build a home and budget for retirement. It prevents homeowner taxes from skyrocketing from changes in the real estate market, over which they have no control. The amount of property tax liability depends almost entirely on the voluntary act of buying a house. The California Supreme Court ruled that the Prop 13 acquisition valuation system was equitable. Critics whine that owners of similar properties pay different sums for the same public services, a system no more inequitable than the traditional method of taxation in which owners of more valuable properties pay more for the same civic services. Critics argue that local governments will starve. Total property tax revenues to local California governments have increased at a rate over inflation and all other economic indicators.

OPTION 2. Move toward real estate annual revaluation to more accurately show market value and to increase predictability for taxpayers and local governments. County assessors assess all real property at its base market value at the same time during one calendar year under a new valuation formula (see NTF Issue Paper: Property Valuation Relief).

OPTION 3. Loosen the unreasonably high burden of proof that property taxpayers now must use to challenge property valuations. Terminate the unelected Tax Equalization & Review Commission which intimidates property owners and replace it with committees of local professionals with backgrounds in real estate valuation.

OPTION 4. Implement a voluntary alternative dispute resolution arbitration system to which taxpayers may appeal their property valuations.

OPTION 5. Alter statutory law limits to prevent taxing authorities from increasing the property tax higher than the rate of inflation per year without a vote of the people.

OPTION 6. To raise property tax collections higher than the rate of inflation, a local taxing authority would need 3/4ths approval vote of its members.

OPTION 7. Stop shifting property tax burdens from one class of taxpayers to another or others.

OPTION 8. Allow local taxing authorities to use non-emergency surplus fund revenues to reduce property tax levies.

OPTION 9. Require that county property valuation and tax notices and property tax override levy ballot issues include comprehensive information for taxpayers, who readily could see how much their taxes would rise or have risen.

Research and documentation for this issue paper done by Doug Kagan and Steve Sfiers, with express prior permission granted for its use by Citizens for Local Control, Cherry County Taxpayers, Dawes County Taxpayers, and other groups in the Tax Freedom Network. 5-08. C