Nebraska Department of Revenue drops idea of reducing homestead exemptions

Nebraska's Department of Revenue said this week that it will not pursue a proposal that would have reduced property tax breaks to help balance the state budget.

Gov. Jim Pillen asked state agencies last month for proposals to cut state spending. In a document obtained by Nebraska Public Media News through a public records request, the Department of Revenue included a proposal (see item 4) reducing homestead exemptions, a program in which the state pays all or part of property tax bills for some seniors and disabled veterans.

The changes would have required everyone who qualifies for an exemption to pay at least 10% of their property tax bill.

Currently, homestead exemption guidelines say single people over 65 are 100% exempt if their annual income is less than $37,001. If they are married, the cutoff is $43,401.

Todd Stubbendieck, state director for AARP Nebraska, an advocacy group for residents over 50, said the proposal could make it more difficult for people to remain in their homes. He said policymakers should consider the impact of the proposed changes on housing affordability.

The proposed changes would also have affected property tax bills for disabled veterans.

Currently, there is no income limit for a 100% exemption for disabled veterans, if their disability is service-related.

The proposed change would have imposed the same income limits as currently exist for disabled veterans if their disability is not service-related.

That would have meant no exemption for single disabled veterans with incomes over $59,000, or married veterans with incomes over $68,700.

Jeff Baker, adjutant quartermaster of the Veterans of Foreign Wars for the Department of Nebraska, criticized the idea:

“I think this proposal could turn a benefit that's based on service and disability into a benefit of financial means, and so I don't think balancing the budget off the backs of disabled veterans is the place to start,” Baker said.

The proposal to require everyone to pay at least 10% of their bill would have saved the state about $14 million a year, and the changes to exemptions would save about $34 million, according to the department.

In a July memo, Pillen said the State Budget Division will review budget-cutting proposals. Revenue spokesman Patrick Roy initially said the department would not comment on the ideas unless they become an official proposal. But when asked for response to criticism Tuesday afternoon, Roy said “Every year DOR (the Department of Revenue) reviews possible policy and legislative changes. This was one idea that was put forward. It will not be pursued.”