Insidious: sinister, menacing, proceeding in a gradual way but with harmful effects.
As have other property owners, I have seen my property tax bill increase significantly over the past few years. My 2023 tax bill on my Omaha house increased by 12% in the past year, and 58% since 2018. Yet, the property tax levy (the rate applied to the market value) increased less than one-half percent during the same period.
This illustrates two fundamental problems with property taxes:
Property taxes are inherently unfair.
The amount of tax assessed has nothing to do with the taxpayer’s ability to pay the tax, unlike other taxes such as income tax. The assessed valuation of my property may have risen in the past six years, but that has nothing to do with my ability to pay the increased tax. I will realize that increase in value only if and when I sell the property. This creates a big problem for the many Douglas County residents, including many who have lived their lifetimes in Douglas County, to continue living here and continue to keep up with their ever-increasing property taxes. Residents are being punished for an incidental increase in the value of their property, an increase that is providing them no current benefit.
Increasing property values create a large windfall for the taxing authorities.
Each year’s increase in property tax revenue is on “autopilot.” Taxing authorities in the county can count on increased revenue without the need to take any action. They can state truthfully that they have not raised tax rates yet have more revenue.
This means that Douglas County and its many taxing authorities will receive an increase in proportion to the increase in county property values without doing anything. No vote to increase the levy, no public hearings, very little public attention. This avoids any kind of accountability by office holders for this large tax increase.
What can be done?
The state has tried various programs to lessen the impact on homeowners, including the current Property Tax Credit. But there can be no “fix” to this problem without fixing the inherent problem with property taxes, which is basing the tax solely on property values.
A commonsense reform would be to require that property tax mill levies be automatically reduced in proportion to the increase in property values. If property values in the county increased by 25%, the mill levy would automatically reduce by 25%, which would mean no tax increase.
This would mean that any taxing authority needing more revenue would be required to go before taxpayers and make their case publicly for raising the mill levy. This is accountability.
Other states are implementing this change to their property tax system. Texas has passed SB-2 which requires an automatic rollback to a revenue neutral rate which forces tax rates down when valuations rise.
Such a requirement would require the Nebraska legislature to adopt a similar law. But this could also be accomplished if taxing authorities in the county would voluntarily lower their mill levies to neutralize valuation increases.
Isn’t this fair?