Nebraska bill would eliminate ESU property tax levy, replace it with state funding; ESUs warn of lost stability and services

Senator Dave Murman introduced LB389 to the Revenue Committee, a bill that would eliminate education service unit (ESU) property-tax levy authority and replace that revenue with state funding that grows by 3.5% annually.

Supporters told the committee the bill would reduce Nebraskans’ reliance on property taxes and model state takeover of ESU funding on the community college levy replacement. Nicole Fox of the Platte Institute summarized that approach, saying, “LB389 directly attacks the problem of high property tax rates.” She told senators the estimated statewide fiscal impact would be roughly $65 million per year by FY2031 and argued the plan would provide direct property-tax relief if the state replaces levied revenue.

ESU leaders, superintendents and educators testified in unified opposition, citing stability and local control concerns. LariAnne Polk, chief executive officer of the Educational Service Unit Coordinating Council, told the committee that ESUs rely on…