Special session on property taxes set to begin amidst uncertainty

The Nebraska Legislature will begin a special session Thursday to address what Gov. Jim Pillen describes as a property tax crisis. But senators appear far from agreeing about what should be done.

Pillen has said that ever since he ran for governor more than three years ago, there’s a subject Nebraskans bring up everywhere he goes: “How on Earth do we solve this – our property tax crisis, running ranchers off their ranch; running people out of their homes?”

To solve it, Pillen has proposed using state taxes to pay for public schools, which currently rely heavily on property taxes.

To pay for that, he’s proposed expanding the state sales tax to cover more goods and services – everything from pop and candy to home and car repairs.

Combined with cuts in state spending and caps on local government spending, Pillen says, overall taxes will decline.

The Republican governor’s plan has drawn fire from both the Right and the Left. Sen. Julie Slama, a conservative Republican in the officially nonpartisan Legislature, said it would benefit only big property owners.

“What you're going to see are middle class Nebraskans, working class Nebraskans, whether they're family farmers, whether they rent their ag operation, or own a small ag operation, to working families who live in our cities and towns, paying more on average, in taxes,” Slama said.

Sen. Danielle Conrad, a progressive Democrat, also criticized Pillen’s approach.

Some critics complaine the plan would be a personal financial benefit to Pillen, founder of a large family hog farming corporation with property around the state. The Lincoln Journal Star estimated Pillen would save about a million dollars a year. Sen. Machaela Cavanaugh doesn’t think that’s fair.ecessary tax increase. It is unpalatable to myself and my friends on the left because it is inequitable."

Some critics complained the plan would be a personal financial benefit to Pillen, founder of a large family hog farming corporation with property around the state. The Lincoln Journal Star estimated Pillen would save about $1 million a year. Sen. Machaela Cavanaugh doesn’t think that’s fair.

“A lot of people across the state that represent both rural, urban suburban Nebraska do not think that giving Jim Pillen personally property tax relief on the backs of Nebraskans is a good idea,” Cavanaugh said.

In a recent news conference, Pillen deflected such criticism.

“If I was worried about making more money, I sure as hell wouldn't have become governor,” he said.

Others criticized particular aspects of the plan. Bryan Slone, president of the Nebraska Chamber of Commerce and Industry, took issue with imposing sales taxes on agricultural and manufacturing machinery and equipment, even if personal property taxes are abolished on those items.

“The taxation of ag and manufacturing equipment is really a problem with our two largest industries in Nebraska… and to raise the cost of production in both of those industries would mean they’d be less competitive with neighboring states,” Slone said.

Colby Coash of the Nebraska Association of School Boards is concerned about the possible effects of the state taking over school funding.

“The lens by which we will view any bill that is introduced is, ‘What impact will that have on local control?’ School board members are elected locally, and we feel that they’re in the best position to understand the needs of those students -- their communities -- right there where they live,” Coash said.

In addition to Pillen’s plan, many other bills are expected to be introduced, including proposals to legalize marijuana, which Pillen has vowed to veto, and legalizing online gambling, which Pillen has said he’ll propose next year.

The governor has said this session will be devoted to property taxes, and will not include other subjects like changing Nebraska to a winner-take-all system for Electoral College voting. And while he’s signaled an openness to changing his proposal, he’s says he’s confident he’ll have 33 votes to overcome any filibuster and get something passed.

“(The) property tax crisis is a crisis in this state," he said. "If somebody’s got a problem with this plan, let’s get to the table and solve it. Anybody that pushes on the red button and not solving this problem is going to... probably have a problem with Nebraskans."

Sen. Eliot Bostar said he likes some parts of Pillen’s proposal, has concerns about others and thinks senators can make progress on the issue.

“I think the Legislature can find something to accomplish related to property taxes during the session,” Bostar said.

But Sen. Wendy DeBoer is skeptical about the loss of local control over schools, what she sees as the unfair redistribution of the tax burden, and whether taxpayers will actually save much money.

“The biggest thing is, what are we doing besides rearranging deck chairs on the Titanic?” DeBoer asked.

Whether plans to lower property taxes will sail ahead, or be sunk by icebergs of opposition, should become clear in the weeks ahead.