Letter to Revenue Committee: LIBA opposition to a local income tax

Chairperson Gloor and members of the Revenue Committee:

I write today on behalf of the Lincoln Independent Business Association (LIBA) in opposition to LB 280 because it redirects school aid away from resource-poor districts and demands local taxpayers make up the difference.

The Tax Equity and Educational Opportunities Support Act or TEEOSA formula, though not simple itself, distills into one simple equation: student needs - local resources = state equalization aid. Its purpose is to equalize school funding and educational opportunities throughout Nebraska.

Lincoln Public Schools receive equalization aid because it has high needs and comparatively low resources. LPS educated 37,845 students in 2014 and anticipates adding nearly 1,000 students per year. Thirty-three LPS schools have more than 40% of students in the free and reduced lunch program. LPS serves 2,200 English Language learners from 64 different countries speaking 56 different languages. Though Lincoln is one of the largest communities in Nebraska, educating this large and this diverse a population of students requires significant resources.

By lowering agricultural land valuations and redistributing state aid LB 280 takes money from school districts with inadequate resources, as determined by the TEEOSA formula, and distributes it to districts with adequate resources. LPS will lose almost $10 million in equalization aid, aid necessary to ensure equal educational opportunities.[i]  Further, it then demands local citizens, already paying the maximum property tax levy, to make up that $10 million difference in state aid through another local tax, an income tax. LB 280’s corresponding reduction in the property tax levy limit is little comfort to taxpayers who understand their overall tax burden will increase.

When property valuations increase, property owners should appeal to their local school and county boards to lower their tax levy. These are the entities that levy the tax and those that should be responsible for lowering it.  Asking the state to direct funds away from Nebraska’s most vulnerable children in order to lower property tax bills is not the answer.

Respectfully,

Coby Mach

President & CEO

Lincoln Independent Business Association

[i] Zach Pluhacek; “People ‘Intrigued’ by new local income tax idea, lawmaker says;” 13 Jan. 2015; Lincoln Journal Star

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