Southeast Community College responds to senators critical of preliminary tax rate decision

BEATRICE – A group of Nebraska state senators are upset by a community college’s plan to increase the school’s property tax rate, just before state legislation removes levying authority of the two-year-schools.

The letter, signed by at least 23 state senators, questions the Southeast Community College Board’s preliminary approval of a budget that would increase the school’s total tax rate to the maximum allowed, 11.25 cents. They say the move runs counter to efforts to provide property tax relief.

SCC President, Dr. Paul Illich, said as LB 243 was written…it’s not the raw tax rate that’s set….but also the level at which a community college stands regarding it’s spending limit. Illich said SCC has been well below its spending authority limit. A 7.5 cent mandatory minimum tax rate was established in the bill.

"If the senators are only looking at the levy rate and not the fact that the 7.5 mandatory minimum takes some of the colleges approximately to or near their maximum spending limit authority and not others....that's a discrepancy in the bill. We're working with it, just doing our best with it...with a 100-percent tax credit."

The bill designates a 100-percent refundable tax credit on state income taxes, for the share of property taxes paid to community colleges. Lawmakers say not everyone will take advantage of the refund. Illich says that’s a point of attention for community colleges.

"The 100-percent tax credit was designed to assure that if a college did have to go above their levy rate to set their baseline appropriately, that it would not harm the taxpayer. That was very important that it was designed, that way."

In 2024, community colleges will no longer be able to levy property taxes for general operations but will be able to levy up to two cents, for capital construction. State aid will become a larger share of the revenue stream of community colleges, designed to increase 3.5% annually. SCC currently makes up about 5% of the total property bill a local resident pays.

"The 3.5%, at least for Southeast Community College, is quite a bit less than it was receiving with valuation changes. So, the baseline has to be set so you can sustain your operations. The most important thing is to fulfill our mission in providing a skilled workforce. So, if that baseline is not set correctly, SCC and others could be looking at shortfalls in their revenue."

The bill was designed to allow community colleges to fall back on property tax if promised state funding in the Community College Future Fund falls short. Southeast is in the middle of a master plan to upgrade its capacity and offer programs in training in those areas of high worker demand.

"We're in the process of constructing the new Sandhills Global Technology Center...that's a partnership with Sandhills Global...also the City of Lincoln is involved in that partnership. We're building dedicated training spaces, we are getting close to breaking ground on a new welding center in Lincoln...a new construction technology center in Milford...and a new ag center in Beatrice. This is the time to be investing in the community colleges. We are poised to address the skilled workforce crisis, but we have to do it through investment and having strong programs and strong partnerships. The money is coming from lots of sources. We have private benefactors involved in these projects, and that's something we're pursuing. But, this is a critical time for the Nebraska community colleges...so we want to get this right.....very, very important."

SCC Board Chairman Neal Stenberg responded in a letter to the group of state senators detailing the reasons behind the board’s preliminary approval of the tax rate and budget. SCC’s budget and tax rate have not yet been finalized. That will come in September.