Nebraska calculates municipal aid using tax levies and population

The law calculates state aid using average property tax levies, population, and certified property values. The average levy covers operating taxes for incorporated municipalities, excluding taxes used to pay principal and interest on debt. A municipality receives no aid if the formula gives a negative amount. If the fund cannot cover all calculated aid, available money is shared proportionally among municipalities. Any extra money goes to the General Fund. The Department of Revenue uses the prior year's certified tax records. Each year, the Auditor of Public Accounts must send the department tax request amounts from the most recent municipal budgets by February 1.

The law reduces aid when a municipality's operating tax levy is below the average levy. This applies when a municipality's operating tax levy is below the average levy for the immediately preceding fiscal year. The reduction is 20 percent for each one-cent step below the average, up to a maximum reduction of 80 percent. The comparison uses the average levy from the immediately preceding fiscal year.