By Paul Hammel
LINCOLN — The president of Southeast Community College and a member of its elected board are pushing back on criticism from 23 state legislators about the college’s proposed tax rate increase.
The senators, in a letter released last week, called on the college board to reconsider a preliminary decision to raise the college’s tax levy from 9.37 cents per $100 valuation to 11.25 cents, the maximum allowed under state statute.
That, the senators said, would raise local taxes to support SCC up to 40%, if combined with recent increases in property valuation. The senators said, that runs counter to the Legislature’s goal of reducing taxes.
While it might not result in a tax increase, because property taxes paid to community colleges are 100% refundable via a state income tax credit, the lawmakers pointed out that not all taxpayers take advantage of the credit.
Both SCC President Paul Illich and Arlyn Uhrmacher of Lincoln, the vice chair of the SCC Board, pushed back on lawmakers’ criticism in separate interviews Friday, saying that the issue is complicated and a new law impacts community colleges very differently, and that the tax rate hike was necessary to sustain the college into the future.
Illich, speaking by phone while on vacation, said SCC has kept its tax rate low in recent years but, because of the passage of a new law that will shift community colleges off the property tax rolls, the college needed to increase its “baseline” rate to avoid a steep tuition increase and a shortage of funds for programs and staff salaries.
SCC, unlike some other community colleges, had unused taxing authority, and this year is the last time the college can capture it before the transition, Illich said.
“We have a skilled workforce crisis in Nebraska, and community colleges are posed to address that. And we have to set our taxing authority appropriately,” he said.
Not ‘pulling the wool’ over anyone
Uhrbacher was more blunt, saying the SCC Board is adhering to a law passed by state legislators this spring that allows community colleges to raise their tax levy to the top rate prior to the state taking over funding of community colleges.
“We aren’t doing anything that was not written into that bill. We’re not trying to pull the wool over their eyes,” Uhrmacher said. “If they didn’t realize what they passed, shame on them.”
This spring, as part of Legislative Bill 243, which was aimed at reducing property taxes, state lawmakers decided to shift the funding of community colleges off property taxes and onto the state, which gets most of its revenue from sales and income taxes.
It was hailed as a structural change that would ensure a reduction in local property taxes of perhaps 5-6%, according to the Platte Institute, an Omaha-based think tank.
Next year is the last year that community colleges can levy property taxes for operating expenses. After that, state funding increases are capped at no more than 3.5% a year — so the “baseline” set this year is important, the SCC officials said.
Approved 10-0 with one abstention
In June, the SCC board voted 10-0, with one abstention, on a preliminary basis to raise its tax rate to the maximum. A final vote will come in September.
The preliminary vote prompted criticism from the Platte Institute, a free-market think tank that advocates for lower taxes, and then generated the critical letter from the state senators.
Norfolk Sen. Rob Dover, who led drafting of the letter, did not immediately respond Friday to a request for comment.
But the letter stated that SCC’s action “piles on taxes at a time when people cannot afford it.”
The letter stated it was disingenuous to say that while taxpayers may see a huge increase on their tax bills next year, that eventually they’ll see a tax break when funding for community colleges shifts to the state.
Illich and Uhrmacher said shifting community colleges off the property tax rolls is a big change that requires a transition and time.
SCC conducted a “needs study” to ensure that the baseline set will be enough to finance the college’s expenses into the future. The college, Illich said, has the highest number of full-time instructors among community colleges and recently inked a contract that provides a 5% increase for staff.
Modernization
Plus, he said, there has been a recent push to “modernize” the three main campuses in Lincoln, Beatrice and Milford. That modernization includes a new health sciences building in Lincoln, a diesel mechanics training center in Milford and an “academic excellence” building in Beatrice.
Uhrbacher said the needs study indicated that unless the SCC board raised its tax rate, the college would be required to cut staff and programs and raise tuition.
He said the board plans to hold at least 15 meetings in its 15-county service area, beginning later this month, to explain its reasoning.
“We will listen to what people have to say,” Uhrmacher said, and then decide whether or not to change their decision.
“It might be the same decision. It might not be the same decision,” he said.
Illich said the issue is complicated. LB 234 impacted the state’s community colleges very differently, he said. Some will see automatic increases in funding via the bill; others, like SCC, were well below their taxing authority limit and needed to make adjustments so that, once state funding takes over, they can sustain their operations.
“We just landed at a spot where some had to do things differently than the others,” Illich said.