After months of promises around property tax cuts and relief, Nebraska has passed a slate of bills that have split opinion – and left many lawmakers disappointed.
Property Tax Bills
Nebraska’s legislature has passed new bills providing some protections against the state’s rapidly rising property taxes. But it’s less than the government promised and less than its residents need.
End of the Special Session
Following two weeks of back-and-forth the legislature approved three bills – LB 34, LB 2, and LB 3 – and sent them off to Gov. Jim Pillen’s desk, bringing an end to this summer’s special legislative session.
$185 Million in Tax Relief
These bills are expected to provide a combined $185 million in property tax relief for Nebraskans, which will result in a 3.5% reduction of the $5.3 billion in local property taxes collected over the 2023 fiscal year.
Automatic Credit
In particular, LB 34 will repurpose an existing tax credit to automatically apply the extra tax relief credit to the property tax statements to people who are eligible, so they won’t have to formally request a refund.
Funding the Bill
The remaining two bills, LB 2 and 3, will be used to apply budget cuts to fund $139 of the tax relief credit, with the remaining $46 million paid through state cash reserves.
Some Express Disappointment
Despite being passed by 40-3 on the last day of the special legislative session, various lawmakers have come out expressing their dissatisfaction and disappointment with the bill, which has fallen far short of what state officials and voters had expected.
The “Absolute Minimum”
The bills have been described as the “absolute minimum,” and “skinnied-down” from the original proposals put forward by Pillen and other lawmakers.
“A Slap in the Face”
“I would rather just go home than to give 3%,” Sen. Steve Erdman said during the session. “It’s a slap in the face.”
Some “Lasting Impacts”
Others were more charitable and urged their colleagues not to feel hopeless about the final decision. “Don’t convince yourself that we’re doing nothing here today,” Sen. Brad von Gillern told other lawmakers. “There are parts of LB 34 that will have a lasting impact on property taxpayers in Nebraska.”
Helpful Caps for the State
Von Gillern pointed out that the primary bill would place caps on how much property taxes municipal and county governments could collect from the previous fiscal year.
The Best of the Worst
Sen. Julie Slama told Nebraska radio station KMA Land that by the end of the session these bills were the “least worst” outcome on offer.
“Half a Step in the Positive Direction”
“Though it was not the outcome myself and any other Nebraskan who supports really transformational property tax reform and relief [wanted],” Slama said. “It ultimately is a half a step in the positive direction when at the start of this we weren’t really anticipating any type of positive outcome.”
Property Tax Crisis
The soaring rates of property taxes in Nebraska have been labeled as a “crisis” by Gov. Pillen. Homeowners across the state have seen their property valuations increase exponentially and even double in recent years, driving up taxes and mortgage payments amid a cost of living crisis.
40% Reduction Proposal
The session was called in by Pillen last month after the State Legislature had failed to approve the governor’s proposal to reduce state property taxes by 40% on average, which had been met with criticisms and outrage from some lawmakers.
New Proposal
Rather than roll back or reduce his proposal, Pillen returned to the special session with another proposal to reduce property taxes by 50% on average. He also called to subject significantly more goods and services to Nebraska’s 5.5% sales tax and create new excise taxes to help fund the property tax cuts.
An Unfair Situation?
Both proposals were rejected on the grounds that they would disproportionately benefit wealthy property owners while the sales tax would make things worse for lower and middle-income Nebraskans, particularly renters.
Rejected by Both Sides
At the other end of the argument, critics claimed the sales and excise tax changes would be “the largest tax increase in Nebraska history” if passed into law.
Many Proposals Put Forward
The special session saw lawmakers provide a myriad of proposals that could help fund tax relief. Some lawmakers pushed to call for another session later in the year.
Call to Vote
If approved, it would have given lawmakers time to put together a new measure that would have allowed Nebraskans to vote on whether they want to lower property taxes. However, it was voted out.
No More Sessions Planned
While Pillen has agreed that more still needs to be done to address the issue, he also believes that calling another special legislative session to address property tax would be a “mistake.”
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