Private school scholarships, tax increase for housing advance in Legislature

How much the state of Nebraska should spend, or cut, was the question as the Legislature began its budget debate Monday. And senators moved toward increasing a tax on people selling houses in order to subsidize housing construction.

On the first day of debating the state budget, senators got right down to details. First up was a proposal to remove $3.5 million for scholarships to private and religious schools. Gov. Jim Pillen had asked for $7 million. The Appropriations Committee proposed cutting that in half. And Sen. Tom Brandt proposed taking it to zero.

Sen. Jana Hughes supported Brandt’s proposed cut.

“In 2024 the second house -- the second house of Nebraska -- the people of Nebraska, overwhelmingly voted, saying they did not want their tax money going to these scholarship programs. I voted for these scholarship programs when I was here at the beginning of my term, but I will listen to Nebraskans, and I will now not support this,” Hughes said.

Two years ago, Nebraskans voted 57-43 percent to repeal a similar scholarship program. But Sen. Kathleen Kauth read a letter from a parent who said her child had benefited.

“I believe all families should have access to the educational environment that best supports their child's success. This scholarship allowed us to make the best choice for our child's well-being and academic growth, while continuing to support the value and importance of public education. I think we can do both, but again, each child is an individual who is growing and changing, and if we don't get them educated, they may miss their opportunity,” Kauth said.

Sen. Christie Armendariz cast opposition to the scholarships as unfair.

“This is economic segregation. We delineate education between the haves, the ones that can pay outside the system, and the ones that are confined to the public -- one system, whether it works for them or not,” Armendariz said.

But Sen. Megan Hunt said it came down to a choice on how to use taxpayer dollars.

“What we are debating today is not whether scholarships should exist, or whether public education or private education is better. What we're talking about is whether public funding should be redirected to subsidize private education out of the general fund in a time when we have no damn money,” Hunt said.

After about an hour of debate, senators voted not to take the scholarship money out of the budget. Twenty-three voted in favor of taking it out, with only 17 voting against. But it would have taken 25 votes for the amendment to succeed, so the proposed cut was rejected.

Also Monday, senators gave first-round approval to increasing the so-called “documentary stamp tax” that people pay when they sell their house. Right now, it sits at $2.32 per $1,000 worth of value, or $464 for a $200,000 house. The bill would raise that tax by a dollar, so the same sale would cost $664. It would raise about $20 million a year to subsidize housing construction.

Sponsoring Sen. Bob Hallstrom cited a 2022 strategic housing report that said Nebraska has a housing “crisis.”

“It cited the need for 35,000 new affordable dwellings in the state over the next five years. I believe we must continue to make state investments to increase housing supply, to supplement our workforce development efforts,” Hallstrom said.

Sen. Tanya Storer said the state’s rural workforce housing program has helped communities in her Sandhills district.

“I want to be very clear that that the program is good, but it is how we pay for that -- that is really what I'm struggling with. And by adding and increasing a cost to the doc stamp, ultimately we're making those transactions more expensive,” Storer said.

Sen. Ben Hansen expressed reservations about further government involvement in housing.

“Now you have government telling people how to build a home, how much green energy they need to put into it, what kind of wiring they need to do, make sure use PVC. Make sure use this kind of stuff. And then, in line with Senator Hallstrom’s bill, the funds we now create to help with affordable housing. I'm not saying affordable housing is bad. People do need homes. I just think they would be much cheaper the less government we have involved in housing over time,” Hansen said.

But Sen. Mike Moser said increasing the tax was probably the best way to go.

“The increase in doc stamps is really not a matter of critical importance to me or my district, but I think in the grand scheme of things, it's an innocent way -- not innocent, least painful way -- to finance middle and workforce housing,” Moser said.

Senators then voted 32-8 to give the bill first-round approval.

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