Gov. Jim Pillen is joined by two dozen lawmakers for a news conference at the end of the Legislature's special session to address property taxes that begin almost one month prior. Aug. 20, 2024. (Zach Wendling/Nebraska Examiner)
LINCOLN — Over the span of the last four months, Nebraska Gov. Jim Pillen lobbied energetically for significant property tax relief, with a stated goal of attaining 40% total property tax relief by the end of his second year in office.
He made clear his intentions in April to call a special session after his previous backed package, Legislative Bill 388 , fell short . Pillen hoped for a different outcome later in the year and by the end of 2024.
“ We’re behind at the end of the first half, but we still got a second half to go,” he told state senators as the regular session ended. “Enjoy halftime. We’ll see you again here soon.”
But when the Legislature completed its special session on Aug. 20, the result was an expanded and revamped program providing only about 3% to 4% more property tax relief, with total relief roughly around 20%, according to Pillen.
Evolving sales tax debate
More than 200 goods or services are exempt from sales taxes in Nebraska, with many of those added over time after the tax was created in 1967. Gov. Jim Pillen eyed eliminating some exemptions to pay for property tax relief, yet none were removed in an ever-evolving special session. Here’s how the ground shifted:
May and June:
A ll sales tax exemptions are on the table for potential removal , except food and medicine, Pillen states. By comparison, six exemptions were included in Legislative Bill 388 , which failed in spring 2024: lottery tickets, pet veterinary services, animal grooming (except livestock), soft drinks, candy and dry cleaning.
July 14:
124 exemptions selected for removal: Draft closed-door materials shared among Pillen and 17 lawmakers.
July 18 :
Number of exemptions set for removal drops to 108 : Part of a formal tax plan that Pillen and lawmakers unveil .
July 25:
Still 108 exemptions : Introduced as part of LB 1 in the special session .
Aug. 12:
68 exemptions now identified for removal, along with one additional exemption proposed (residential electricity): LB 34, advanced 6-1 from the Revenue Committee for floor debate .
Aug. 16:
Removal list down to 12 exemptions : State Sen. Lou Ann Linehan of Elkhorn in various amendments to LB 34 . She pulled all of them before any got to a vote.
Aug. 20:
Zero exemptions removed: LB 34 as passed .
Behind the scenes, plans were changing so quickly it was hard to keep up as the summer progressed. Multiple lawmakers working with Pillen said they kept up through reading various news reports.
It’s been almost two weeks since the special session ended and the new laws passed during the 17-day session took effect. Now that the dust has settled, here is a look back at what the governor wanted to achieve and how it evolved — up to the session’s final days.
Automatic tax credit
Lawmakers approved LB 34 on Aug. 20 in a special session, more than four months after they went home for the first time. It added $185 million in new school tax relief, the majority of which would be paid through budget cuts. LB 34 also tied yearly property tax increases by municipal or county governments to no more than the greater of inflation or 0% in times of deflation, with a few exceptions.
Lawmakers and State Treasurer Tom Briese have celebrated a third part of LB 34 that revamps the income tax credits for property taxes paid in a program established through LB 1107 in 2020.
Instead of taxpayers needing to request a refund later, the credit will now appear on annual tax statements, beginning this winter.
“This is a big deal,” Pillen said after signing the legislation. “We’re making sure that 45% of Nebraskans who have not been getting that credit will now receive a 20% property tax cut.”
A pressure campaign and sales taxes
Many of the twists and turns of the special session came at Pillen’s instigation, including 26 town halls he held as a pressure campaign on state lawmakers, campaign texts to constituents and a self-paid brochure to promote his ideas.
He had closed-door meetings with 17 lawmakers, who were told to not talk about them. Pillen publicly shared the conversations, though, and multiple senators said the group didn’t reach consensus before the session began.
Pillen talked extensively about broadening the state’s sales tax base, which includes dozens of exemptions on various goods and services. In Nebraska, goods are taxed by default unless the Legislature rules them exempt, while services are exempt unless specifically taxed.
Upward of $7 billion worth of sales taxes are annually exempt, according to estimates from the Department of Revenue and Pillen’s staff.
Any time a senator suggested taxing a currently exempt product or service, unlikely legislative allies from across the political aisle lined up to criticize the move as one coming from Pillen.
This included State Sens. Danielle Conrad of Lincoln and Julie Slama of Dunbar, who called Pillen’s LB 1 and similar proposals as “ a reverse Robin Hood scheme ” that “ robs Peter to pay Pillen .”
“I love Nebraska. I’ve been blessed more than I deserve in 100 lifetimes,” Pillen told the Nebraska Examiner the day before the special session began. “But I’m not going to apologize for it. We’ve worked our tails off, we took risks, still do. And the thought that I’m doing this for personal gain, it’s kind of beyond belief.”
‘A swamp inside the Rotunda’
Pillen blamed “special interests” for why LB 388 failed and said Nebraskans needed to get involved. He used that same argument for why LB 34 was a “step forward” but not far enough.
In preparation for 2025, Pillen is employing a similar strategy as before the special session: Get more Nebraskans involved .
Pillen said Nebraskans need to be informed “so there’s no wiggle room, there’s no misleading with innuendos and all the silly things that go on out in that [Capitol] Rotunda,” where lobbyists often talk to senators.
“We’ve got a heck of a lot of rain in Nebraska,” Pillen said just before he signed the special session proposals. “I did not think we could get a swamp inside the Rotunda.”
At least 15 senators are term-limited or otherwise not returning to the Legislature next year, meaning about one-third of senators in the 49-member Legislature will be learning the ropes as more tax proposals are considered.
View a timeline below created by the Nebraska Examiner on the trajectory of the 2024 summer special session and debate on property taxes. Or visit the timeline in a new tab online .
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