Legislature begins property tax session with a variety of bill introductions

The Nebraska Legislature began a special session called by Gov. Jim Pillen to reduce property taxes Thursday with a variety of proposals by the governor and senators introduced.

Leading off the first day of the special session with a prayer, Sen. Myron Dorn asked for divine help in the days ahead.

“We come before you this morning, needing your wisdom and discernment to do what is best for the people we represent, and for our great State of Nebraska," Dorn said. "We know there will be different views on the issues before us in this special session. So we ask you to help us to be quick to listen to each other, slow to respond, and even slower to get angry."

Senators then got down to business, introducing bills to be considered. The governor proposed to cut the budget and expand state sales taxes in order to reduce school property taxes by more than $1 billion.

• To see a summary of the governor's proposal, click here.
• To see how much he said it would save the owner of a $275,000 house in every school district, click here.

But there were also more modest proposals. Sen. Jana Hughes wants to reduce property taxes more gradually, with an initial cost of about $440 million. To help pay for that, she proposed a 2% tax on deliveries of purchases from retailers like Amazon. Hughes said in addition to raising money, such a tax could help local “brick and mortar” stores.

“If I go to my brick and mortar (store), my brick and mortar’s paying a property tax, which goes to the schools, my brick and mortar is paying people that work there, they're paying income tax, which potentially could go to schools," Hughes said. "And so it's kind of like, in lieu of having all this stuff shipped from outside the state of Nebraska, potentially even overseas, to kind of help mitigate that."

Sen. Jane Raybould introduced a proposal to raise money by delaying some of the income tax cuts passed last year. And Sen. Carol Blood proposed creating a new income tax bracket for individuals making more than $250,000 or couples above $500,000. Blood, a Democrat in the officially nonpartisan Legislature and a candidate for Congress, contrasted her proposal with that of Pillen, a Republican who defeated her in the race for governor two years ago.

“Gov. Pillen’s bill clearly benefits the wealthy in Nebraska, especially the wealthy property owners," Blood said. "And I did a survey that hundreds of Nebraskans completed and the number one thing they asked us to do is to make sure that the wealthy people in Nebraska pay their fair share."

Sen. John Cavanaugh introduced a bill to terminate the Perkins County Canal project, designed to bring water from Colorado to Nebraska at a cost of more than $600 million, and use that money to lower property taxes.

Several key interest groups also weighed in on Gov. Pillen’s proposals. A coalition of nine agricultural groups, including the Farm Bureau, Cattlemen, and producers of corn, pork, soybeans and wheat, wrote to senators supporting property tax relief, but opposing taxes on farm machinery and equipment, which Pillen has proposed.

Jon Cannon, a lobbyist for the Nebraska Association of County Officials, said while Pillen has good intentions, he’s taking the wrong approach. Cannon objected to Pillen’s proposal to cap local government property tax increases at the increase in the consumer price index, or CPI.

“CPI measures the basket of goods that you and I would buy as individual consumers: eggs, milk, gas, shaving cream, whatever," he said. "The market that we're in as counties is subtly different. We don't go to Walmart and buy gravel or asphalt or squad cars or specialized equipment. We're in a very narrow market with a limited number of vendors and they have a limited pool of buyers and they really can dictate the price. And so if hot mix asphalt goes up ten and a half percent year over year, there is nothing we can do about it."

But Sen. Lou Ann Linehan, chair of the Revenue Committee who introduced the tax bill for the governor, said responding to that kind of market power is part of the point.

“I'm not an economist, but I've been in government a long time," Linehan said. "And it seems to me that whoever is contracting with government has a very good idea how much money is available, and that's what they charge."

Linehan says she hopes lawmakers stay in session until Labor Day to work out some compromises to reduce property taxes. But it takes only 25 of the 49-member body to vote to adjourn. Asked if she’s worried that at some point, senators will get hot and tired and 25 of them will vote to go home, Linehan replied, “And tell their constituents what? They were hot and tired?”

The session continues Friday, with a Reference Committee meeting to decide which bills go to which committees for hearings. Speaker John Arch said if the committee decides that some bills are outside of the subjects the governor outlined for the special session, it could decide not to refer them for a public hearing. Public hearings are scheduled to begin Monday.