Senators end special session with passage of slimmed-down tax bill

Aug. 20, 2024, 5 p.m. ·

Governor Jim Pillen, left, signs tax bill as Senator Lou Ann Linehan, right, and other senators look on. (Photo by Fred Knapp, Nebraska Public Media News)
Gov. Jim Pillen, left, signs tax bill as Sen. Lou Ann Linehan, right, and other senators look on. (Photo by Fred Knapp, Nebraska Public Media News)

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The Nebraska Legislature concluded its special session Tuesday, approving a vastly slimmed-down plan for property tax relief amid calls for lawmakers to address the subject again next year.

Shortly after lawmakers approved the slimmed-down plan and voted to end their special session, Gov. Jim Pillen held a news conference to thank them for their work. The governor had called them together to consider his plan, which he said would cut property taxes in half.

What they approved instead would cut property taxes overall by about 3%, and would not affect most people. Still, Pillen said for those it would affect, it was good news.

“This is a big deal, making sure that 45% of the Nebraskans that can't afford to hire an accountant, can't afford to do this or that, that they are getting a 20% property tax cut,” Pillen said.

The bill would expand an existing property tax credit to replace an income tax credit.

Currently, property owners pay their bill, then they can get a credit for part of it when they file their income tax, which reduces how much they owe. The bill the Legislature passed, LB34, would reduce property tax bills when they’re sent out, rather than making people file for a credit later.

The expanded credit would cost about $185 million, paid for by taking unused cash from state agency budgets.

Originally, Pillen had proposed a much larger cut, paid for by imposing sales tax on currently untaxed goods and services ranging from pop and candy to car and home repairs, as well as increased taxes on liquor and cigarettes. But that was met with a wave of opposition. Pillen blamed special interest lobbyists for getting senators to oppose his plan.

“What special interests and associations did for their interests ,instead of the interest in Nebraskans, put lots and lots of pressure on certain people,” he said.

But Sen. Danielle Conrad, a leading critic of Pillen’s proposal, said the burden of new taxes would have fallen on people who could not afford them.

“Everyday working Nebraskans and seniors are not special interests, and they're not represented by lobbyists," Conrad said. "They're represented by state senators like myself and the group of state senators across the political spectrum who said no to the Pillen plan."


More from the Legislature's special session:

Senators advance property tax credits, consider bigger changes

Lawmakers divided over doing a little or trying something more

Legislature moves toward budget cuts

Legislature advances vastly scaled-back property tax bill

Legislature tees up key property tax vote for Tuesday

Senators continue thrashing around on taxes

Special session debate: Should there even be a special session?


In debate Tuesday, Sen. Mike McDonnell supported the bill that did pass, but said lawmakers should do more.

“Do I support LB34? Yes, because it's something,” McDonnell said. "It's definitely not close to enough. And I don't want to quit working right now, while I still think we have a chance with the people in this room, because people that are I'm talking to from my district and around the state are saying, ‘You have to do something now. We can't wait any longer.'"

Nevertheless, senators rejected last-minute proposals to do more. Among the options was an amendment offered by Sen. Justin Wayne that would have removed sales taxes on residential electricity bills. He would have made up for lost revenue by taxing services ranging from charter flights and lobbying to dry cleaning. Wayne acknowledged his proposal deviated from the main subject of the session, but maintained it would help.

“I'm not going to say it's a property tax cut, because it's not," Wayne said. "It's a shift of taxes to remove electricity that helps all people, not just those who own property."

Sen. Rob Clements said Wayne’s proposal was too late.

“It should be considered in the future, but not as a last minute addition to this bill,” Clements said.

There was also not enough support for another proposal, to ask voters about amending the constitution to allow lower tax valuations on owner-occupied homes.

Sen. Lou Ann Linehan, who led the charge for Pillen’s proposals, said she had hoped for more, but what was being passed contained some good elements.

“It does give more relief, so it's going in the right direction," Linehan said. "It gives relief to people that aren't claiming it, which is very important. It gets caps, so it can stop -- slow down -- we're not going to stop increases, but maybe hopefully slow down increases. And finally, it has the potential to provide more if our revenues go up, which I believe they will."

The bill caps annual property tax increases for counties, cities and villages at the level of inflation, as measured by an index that tracks changes in costs for state and local governments. According to the Federal Reserve, that index rose an average of almost 4% a year for the last 20 years, compared to 2.5% for the consumer price index.

Tax bill vote
How senators voted on the final passage of LB34, the tax bill.

Local governments will be able to override that cap, but only with a vote of the people.

The bill also requires putting state revenues into the property tax credit fund if they grow at more than 3% per year.

As the debate neared its conclusion, Sen. Steve Halloran offered his opinion on the significance of what lawmakers were about to approve for the overall property tax situation.

“If you listen real closely, you can hear the resounding sound of the can being kicked down the road one more time,” Halloran said.

And Sen. Rob Dover used a football analogy to reply to senators who wanted to remain in special session to try and do more.

“You never want to give up," Dover said. "You want to stay in the game to the end, and all this rhetoric. We're playing Oklahoma. We're behind 42 to 7… Let's go home and play them again next year."

Pillen used a similar analogy, looking forward.

“I think that we’re all learning," he said. "We’re all figuring out how this works and we’ve got a lot of work ahead of us. We’ll keep learning. We’ll watch a lot of game film and we’ll come back stronger next year."

However, the governor, who once vowed to keep lawmakers in session until Christmas if necessary, said he would not call another special session this year.