Nebraska’s creeping property tax rate has been the subject of much discussion lately. High property taxes and rising inflation have spurred conversation about the best way to reduce property tax bills in the state.
Last year, Gov. Jim Pillen made a plan for reducing state income tax rates. His eyes are now set on the next tax burden: property taxes. However, there is still much debate on whether his plan will benefit Nebraska and provide much-needed relief for homeowners.
Here's more of what you need to know.
Property tax relief plan in Nebraska
Pillen’s Legislative Bill 1 sought to reduce property tax bills for Nebraska residents by an average of 50%.
“In a few short years Nebraskans will be paying $1 million a day in property taxes,” Gov. Pillen stated in a press release. “That’s $6 billion a year. Property taxes are hurting young people, our seniors, homeowners, renters, farmers, business owners.”
The proposal would also cap local government spending while phasing out most K-12 property taxes within three years. But Pillen’s bill comes with a couple of caveats:
- Property tax revenue heavily funding K-12 schools would shift $2.6 billion in expenses to the state
- Revenue lost from property taxes would largely come out of expanded sales tax on citizens
If the proposed plan is approved, it will be the largest state tax reform since 1967 .
Critics of Gov. Pillen’s plan claim the property tax cut benefits richer residents while levying more sales taxes on the average Nebraskan renter. Nebraska’s 5.5% sales tax would add new taxes on about 100 goods and services previously tax-exempt. This is in addition to local county and city taxes.
While some claim tax-exempt goods or services should have been taxed all along, state Sen. Danielle Conrad calls the proposal a “reverse Robin Hood.”
Conrad’s remark highlights the regressive nature of sales taxes, meaning household incomes that make less would see a higher percentage of their budgets going to taxes.
Other critics are concerned about the new “sin tax” on candy or soft drinks in the proposed legislation. Would this bill open the door to a future grocery tax in the state ? Previously, these items were considered tax-exempt, as were services like pet grooming, handyman services, haircuts, and zoo tickets. But under the bill, those and other services could be taxed in Nebraska.
Also, the bill proposes higher sales tax rates on alcohol and tobacco. This includes cigarettes, spirits (not beer or wine), as well as games of skill, lottery tickets, and consumable hemp. Nebraska has heard an outcry from many about the new tax proposal.
On the wings of all this pushback, Gov. Pillen called a special session in late July. (The session began on July 25 and will run through August 15.) So far, state lawmakers have weighed in on where additional funds could be found and many bills have come out of this session. One proposal would legalize and tax marijuana in the state.
Is Nebraska legalizing marijuana?
Earlier this month, Democratic Sens Justin Wayne and Terrell McKinney proposed Legislative Bills 52 and 71 to legalize marijuana. While consumable hemp is already legal in Nebraska, these bills would provide the legal framework to grow, produce, and sell marijuana. Anyone 21 years or older would be able to purchase it.
While the bills are new, the idea isn’t. Nebraskan lawmakers have tried two other times in recent history to legalize marijuana. The current bills are different from previous proposals in a couple of ways:
- They would legalize all marijuana instead of only medical marijuana
- One bill would tax retailers and growers at 25%, the other at 16%
Proponents estimate the new bills will bring in significant revenue, at $90 million.
But there are many opponents. Chief among them are law enforcement officials . For example, the Deputy solicitor general in the Nebraska Attorney General’s Office, Zachary Viglianco, cited potential health risks from legalizing marijuana, like increased risks of heart attack and cancer, and opposed the bill.
Other law enforcement officials pointed to purported increases in homicide rates, violent crime, and impaired driving in states where marijuana is legal.
But marijuana wasn’t the only suggested tax for homeowner tax relief in Nebraska. Lawmakers have also proposed an ammo excise tax was also proposed. If passed, the ammo bill will make history.
What is the ammo tax bill in Nebraska?
Legislative Bill 65, proposed by Sen. Lou Ann Linehan, creates a 5% excise tax on all ammunition sales in Nebraska.
The bill is somewhat modeled on the federal Pittman-Robertson Act tax bill. Pittman-Robertson imposes an 11% tax on firearms, ammunition, and archery equipment to fund wildlife conservation projects. The Nebraskan version will use half its funds for wildlife projects and those suffering from PTSD, while the other half will be used for property tax relief. Only recently, California’s gun and ammo tax became law. If this new bill is passed, Nebraska will be the second state in history to enact a gun and ammo excise tax.
Opponents of the bill include the National Rifle Association ( NRA ), some proponents of the Second Amendment, and others who merely don't want to see higher sales taxes. The ammo excise tax proposal and marijuana bill are just three of over 80 that came out of the special property tax session.
Gov. Pillen has not directly remarked on the ammo tax bill but has advocated against the legalization of marijuana.
After receiving a plethora of suggestions via special session bills, Gov. Pillen amended his bill. For example, the amended plan will shift $1.8 billion of K-12 expenses to the state and will be more lenient on vital local spending, like police, firefighters, and prosecutor offices.
Another big change was in the number and quality of sales tax items. If the bill is approved, Instead of over 100 goods and services now becoming taxable, more than 70 would become taxable.
The Nebraska special session is scheduled to end in August. Bills from the session could go to the ballot box in November — in some form or other.
The marijuana bill is a good example. Nebraskans for Medical Marijuana , a registered ballot committee, has garnered signatures for their spot on the ballot. Other items - like the ammo excise tax and the legalization of online gambling - have had no immediate action during the special session, but that doesn't mean they're down and out.
So, all Nebraskans are encouraged to vote. There may be much to think about this year at the ballot box.
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