Nebraska lawmakers pass bills to slow the rise of property taxes. Some are pushing to try harder

(AP) — Nearly a month after being summoned back to the Capitol to address soaring property taxes, the Nebraska Legislature has adjourned without passing significant relief.

Lawmakers passed an anemic slate of bills that does little more than slow the increase of property taxes. An 11th-hour push by a handful of lawmakers to come back later in the year with a new measure was voted down Tuesday before the body adjourned the special session. That measure would have allowed voters to decide whether to lower the property tax rate for homeowners.

What passed instead was a main bill to cap the tax levies of city and other local governments and to “front-load” an existing property tax credit so that everyone eligible will automatically receive it. Two companion bills make a series of budget cuts to pay the nearly $140 million cost.

Republican Gov. Jim Pillen called the special session last month after the Legislature failed in the regular session to pass his proposed plan to cut property taxes by an average of 40%. The move to seek relief comes as soaring home and land prices in the state have led to ballooning property tax bills for homeowners and farmers alike.

Rather than scaling down his plans after the regular session, Pillen called for even more ambitious cuts, proposing a 50% reduction on average of property taxes. His proposals for the special session included not only the tax levy caps and budget cuts but a shift to vastly expand goods and services subject to the state’s 5.5% sales tax. It also sought to create new excise taxes on liquor, cigarettes, CBD products and other items.

But the shift to sales and excise taxes hit a sour note with lawmakers from both ends of the political spectrum, who labeled it “the largest tax increase in Nebraska history.” Democrats in the country’s only one-chamber, officially nonpartisan legislature railed that the new taxes would most benefit wealthy landowners at the expense of the working poor. Meanwhile, hardline conservatives objected to what they viewed as tax increase without significant cuts to spending.

What finally passed and was signed into law Tuesday by Pillen will come to less than 5% of the property tax relief he had proposed — a result that drew more detraction than praise.

Nebraska Appleseed, an advocacy nonprofit, excoriated the measure that cut several state agency budgets — including $40 million from the Nebraska Department of Health and Human Services. The group fears those cuts could hit food and child care assistance for low-income residents.

“These cuts to DHHS’s budget are drastic and irresponsible and will significantly impact our state’s ability to serve communities throughout Nebraska,” Nebraska Appleseed said in a statement.

Even the measures’ most ardent supporters acknowledged that the final result was lackluster. Republican Sen. Lou Ann Linehan, who introduced the main bill at the behest of Pillen, said at its signing that “maybe it’s disappointing, yes,” before praising the segment that will convey an automatic 20% cut to nearly half of property owners who had failed to take advantage of the existing tax credit in the last three years.

Asked what benefit the other 55% who have been claiming the credit will receive, Pillen agreed it wasn’t much.

“For the folks already claiming it? Yeah, we’ve fallen short,” he said.

Pillen had repeatedly promised to keep calling lawmakers back into session “through Christmas” if they fail to pass significant property tax relief. But when asked about that Tuesday, the governor said he did not plan to call lawmakers back again this year.

Despite being unable to get consensus in the Legislature on expanding Nebraska’s sales tax base, Pillen indicated he will keep pushing to collect sales tax on many goods and services currently exempt, not including groceries and medicine.

“If all the sales tax exemptions hadn’t taken place in the last 50-some plus years, in 2023 we’d have had $7 billion,” Pillen said.

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