Nebraska community colleges oppose elimination of property tax authority

BEATRICE – Nebraska community colleges are opposing a bill that would take away their property tax authority, to help fund operations.

State Senator Dave Murman’s bill….LB 783…was heard in the revenue committee on Thursday. The bill would replace property tax funding for the two-year schools with increased state funds…increasing 3.5% for the 2025 tax year….and starting in 2028….3.5% each year after.

The bill is part of Governor Jim Pillen’s property tax relief plan.  "I believe that the change in this bill will be a game changer in strengthening.....strengthening our community colleges so our kids are lifted up, filling the workforce needs."

Currently, Nebraska community colleges are funded by a combination of tuition revenue, property tax revenue and state aid. Chairman of the Southeast Community College Board, Neal Stenberg, fears cutting property tax authority of the schools would scuttle a plan Southeast has been undertaking for modernizing its campuses in Beatrice, Lincoln and Milford.

"The bill will cause SCC to default on about $50 million in financing used to pay for recent capital improvements...and make impossible, as a practical matter, to finance any additional capital improvements in the future. That's because this bill replaces general fund revenue. It does not replace capital improvement fund revenue."

SCC uses a two-cent capital construction levy that comes from property taxes, to fund the modernization program. Community Colleges are allowed up to two cents for capital construction, and their total levy for general operations and construction is capped at 11.25 cents. Southeast Community College currently has a total tax rate of 9.37 cents.

"The bill would put at risk SCC's ability to provide high quality, affordable education to thousands of Nebraska students...many of whom lack the economic wherewithal to otherwise participate in postsecondary education. LB 783 will severely hinder the ability of the community colleges to produce the trained workforce which is absolutely essential for economic development."

Stenberg said SCC has used its capital construction levy in a careful way, along with private support, to undertake projects such as a health sciences facility in Lincoln.  "We could not have built that facility without the taxing authority we currently use...and we use responsibly and effectively. We're poised to do new projects. One of them would be a 94,000 square foot construction technology center on the Milford Campus. Why do we want to do that? Because, the folks in the industry are begging us to do it. They say they need it...they say they don't have enough workers. But, if we don't have that levy authority, we can't build it."

Stenberg says local control of what community colleges do for their areas is important.  Representatives of Metro Community College and Northeast Community College also spoke in opposition to LB 783. The bill has the support of major farm organizations as a means of lowering property taxes.