Nebraska senators urge SCC to reconsider plan to raise property tax levy

Led by Sen. Robert Dover of Norfolk, 23 state senators are objecting to SCC’s plan to increase its levy to 11.25 cents per $100 of valuation before a state law changing how community colleges are funded goes into effect.

Beginning in the 2024-25 school year, under a property tax reform package (LB243) from Sen. Tom Briese, a “Community College Future Fund” will replace the property tax funding with state appropriations at Nebraska’s six community colleges.

The change is expected to reduce property owners’ tax bills by 5%-6% annually, according to an estimate from the conservative-leaning Platte Institute at a legislative hearing earlier this year.

The baseline amount community colleges will receive when the law takes effect will be equal to the property tax levy set for the upcoming 2023-24 school year plus an added 3.5%. The funding to each community college will grow by 3.5% annually thereafter.

SCC President Paul Illich told the Board of Governors at its June meeting the funding change will slow and ultimately limit the college’s ability to fund its operations over the coming decade, and require either steep increases to student tuition or cuts to programs.

In response, the board gave preliminary approval to a plan to increase the tax levy to the maximum allowed. Final approval for the plan will go before the Board of Governors in September.

If approved, the owner of a home valued at $228,660 — the average 2022 home value in Lincoln — could expect to pay roughly $257 in property taxes to support SCC, up from $214 this year.

Neal Stenberg, the chair of the SCC Board of Governors, said the proposed levy increase is “a one-time chance” for the board to ensure the college remains financially secure in the future, open to all students, and responsive to the community and industry’s needs.

“(The board’s) judgment is that unless we raise the levy for 2023-24 that there is going to be a shortfall in general fund revenue in future years,” Stenberg said. “I think that’s a very serious concern of the board.”

Stenberg also said SCC is planning a series of public meetings across its 15-county service area beginning in late July and continuing through August to educate taxpayers about a tax credit they can claim to reimburse taxes paid to support the college.

The tax credit will repay 50% of the taxes paid to the college in 2024 and 100% of the taxes paid in 2025; the letter from state senators casts doubt that many taxpayers would ultimately seek the credit, however.

And Dover, who just finished his first year in the Legislature after being appointed to fill a seat vacated by Rep. Mike Flood, said SCC is the only community college seeking to raise its levy ahead of the change.

As property valuations continue to rise — the average valuation increase across SCC’s service area is 15.3% — other community college leaders have assured senators they do not plan to follow SCC’s lead in raising property tax levies next year.

“What they are doing is wrong,” Dover said in a phone interview, noting that some SCC taxpayers could pay 40% more to SCC in the coming year than they did last year. “It’s going against everything the state Legislature is trying to do and everything the public wants.”

In addition to asking more from taxpayers in SCC’s 15-county area in the coming year, Dover said the college’s move to increase its levy would also mean taxpayers across the state would be paying more in the coming years.

Those increases, if the plan moves forward, would be based on budget projections and not actual needs, Dover added: “It just isn’t a responsible decision for the board to put forward.”

The letter asks for the board to reconsider the proposed property tax levy increase and suggests state lawmakers could enact new legislation if SCC doesn’t budge.

“If the Board of Governors determines that it is in the best interest of SCC to continue this course of action, we will consider addressing this issue in the next legislative session,” the letter states.

Dover said no bills are currently in the works, but he added that the Legislature could consider several changes to state statute to prevent SCC or others from continuing down the current path.

Stenberg said he believes the board will give the lawmakers’ letter “careful consideration” in the coming weeks as it meets with constituents and taxpayers to discuss the plan.

“I think it illustrates their concern,” he said. “It’s up to our board to do what we judge to be right.”

The senators who signed the letter are: Tom Brandt of Plymouth, Myron Dorn of Adams, Ray Aguilar of Grand Island, Loren Lippincott of Central City, Julie Slama of Peru, Danielle Conrad of Lincoln, Robert Clements of Elmwood, Carolyn Bosn of Lincoln, Barry DeKay of Niobrara, Kathleen Kauth of Omaha, Brad von Gillern of Elkhorn, Mike Jacobson of North Platte, Jana Hughes of Seward, Rick Holdcroft of Bellevue, John Lowe of Kearney, Lou Ann Linehan of Elkhorn, Dave Murman of Glenvil, Tom Briese of Albion, Teresa Ibach of Sumner, John Arch of Papillion, Tom Brewer of Gordon and Rita Sanders of Bellevue.