Nebraska Gov. Pillen formally calls special session for property tax relief

Gov. Jim Pillen officially unviles his property tax plan as a summer-long attempt to find a path to reduce local property taxes. July 18, 2024. (Zach Wendling/Nebraska Examiner)

Lincoln — Gov. Jim Pillen on Wednesday officially called state lawmakers back to Lincoln in just one day to address a host of items related to property tax relief.

The long-awaited proclamation comes months after a previous Pillen-backed plan for tax relief failed to garner enough legislative support to pass. Beginning at 10 a.m. Thursday, the legislative body of 49 senators will have three days to introduce bills that fall within the scope of the governor’s proclamation. The session will continue until lawmakers vote to go home.

Pillen’s end goal is the state taking over more than 80% of local K-12 school expenses, more than $2.6 billion, from local property tax rolls over a three-year period. He is also aiming to :

• Create hard caps on how much property tax revenue municipal and county governments can collect each year.
• Increase taxes on “sin” items, such as spirits, cigarettes, vaping, consumable hemp, keno and game of skill devices.
• Remove sales and use tax exemptions on more than 100 goods and services.

“We have so much opportunity to grow Nebraska, and our property taxes are so out of whack,” Pillen told the Nebraska Examiner on Wednesday.

Special session procedures

Pillen often points to his first year in office, when property taxes increased $286 million to $5.3 billion total, a 5.7% bump. He fears taxes will soon go up $1 million each day if lawmakers don’t step in.

One or more lawmakers must introduce Pillen’s ideas on his behalf. They also can introduce their own proposals related to the scope of the special session.

Pillen confirmed he would sign legislation to let voters weigh in on whether to legalize online sports this fall, if passed by lawmakers, but would veto legislation to tax or legalize marijuana.

Speaker John Arch of La Vista previously told the Nebraska Examiner it will be up to the Legislature to determine whether introduced legislation remains within the scope of Pillen’s call .

Per the Nebraska Constitution, lawmakers can only consider bills that pertain to the proclamation, though Pillen can amend his call later. Bills can be introduced only during the first three legislative days, scheduled to run Thursday through Saturday.

Multiple senators have confirmed to the Examiner that at least 80 bills are being prepared ahead of the special session.

Full-day hearings are anticipated to begin Monday. All bills, or policy-based resolutions such as constitutional amendments, that are referenced to one of 14 standing committees for consideration will receive a public hearing.

Future school funding rewrite

Pillen’s proclamation and the text of proposals that lawmakers introduce on his behalf do not include language on unfunded mandates on local governments, and funding appears to be limited to sales taxes, excise taxes and spending cuts.

A committee of a dozen superintendents is working to identify unfunded education mandates, such as training requirements, Pillen said. He did not answer whether lawmakers could tackle such mandates during the session, though he had identified them as a priority this summer.

“I’ve told superintendents: As long as I’m governor, I’m committed to helping make their jobs better so they can be focused on working with their boards and educating our children, not worrying about where on earth funding is coming from,” Pillen said.

Pillen promotes property tax plan to Nebraska school leaders

Another component intentionally left off the proclamation is rewrites to a different state aid program to schools: the Tax Equity and Educational Opportunities Support Act , which has been perennially updated since its adoption in 1990.

“I’m telling you what, with the formula and the funding and valuations and all the complexities, I feel sorry for superintendents,” Pillen said Wednesday. “It’s tough. We can simplify it a lot.”

‘Tough consequences’ for opponents

Pillen has faced great pushback from lawmakers and appears to be at risk of not getting to 33 votes for his ideas, which he would need if the legislation is filibustered.

He promised to meet with as many lawmakers as he could before the special session and said he met with 42 or 43 of the 49 members heading into the special session. Some weren’t able to meet because of scheduling conflicts.

Some lawmakers have fiercely opposed Pillen’s proposal — describing it as a “reverse Robin Hood scheme” or a plan that “robs Peter to pay Pillen.” The governor has said he will keep lawmakers “ til Christmas ” if needed to enact relief.

Pillen said he is “not into speculating” but has “100% confidence” lawmakers will get the job done. Asked how, he said it’s not about what lawmakers say, but what they do, because Nebraskans need tax relief.

“When it comes time to push that button [for the bill], it’s one heck of a responsibility to not push green,” Pillen said. “You push red, there’s going to be tough consequences.”

Property tax special session proclamation

The governor’s proclamation reads:

BY VIRTUE OF THE AUTHORITY VESTED in the Governor by Article IV, Section 8, of the Constitution of the State of Nebraska, I, Jim Pillen, as Governor of the State of Nebraska, believing that an extraordinary occasion has arisen, DO HEREBY CALL the Legislature of Nebraska to convene in extraordinary session at the State Capitol on July 25, 2024, at 10:00 AM, for the purpose of considering and enacting legislation relating only to the following subjects:

1. Making the following changes to appropriations approved by the 108th Legislature:
   • Reducing general fund appropriations and reappropriations approved by the 108th Legislature;
   • Lapsing cash fund balances and reallocate cash fund revenue and interest as approved by the 108th Legislature;
   • Modifying fees and assessments to replace general fund appropriations as approved by the 108th Legislature;
   • Creating cash and revolving funds and expanding eligible uses of specific funds to support general fund appropriation reductions approved by the 108th Legislature;
   • Modifying cash fund, revolving fund, and federal fund appropriations to support general fund reductions approved by the 108th Legislature;
   • Transferring funds to the General Fund and Education Future Fund;
   • Transferring funds between cash funds to support specific general fund reductions approved by the 108th Legislature;
   • Transferring funds from the cash reserve fund to cash funds to support specific general fund reductions approved by the 108th Legislature;
   • Modifying cash fund appropriations approved by the 108th Legislature to support specific general fund reductions;
2. Modifying the state cigarette tax;
3. Modifying state taxes on vaping products;
4. Modifying the state tax on consumable spirit alcohol;
5. Modifying the state tax on Keno gaming;
6. Modifying the state tax on game of skill devices as defined in LB 685, as approved on April 15, 2024;
7. Establishing sales or use taxes on services and items that are not currently taxed;
8. Establishing an excise tax on consumable hemp, as defined in the Agriculture Improvement Act of 2018;
9. Eliminating state sales tax exemptions;
10. Eliminating the personal property tax liability on agricultural and machinery equipment;
11. Reforming credits defined in the Property Tax Credit Act;
12. Reforming credits defined in the Nebraska Property Tax Incentive Act;
13. Amending Neb. Rev. Stat. § 77-27,142 to allow for the redistribution of local option sales taxes;
14. Establishing a property tax relief program, which may include modifying state educational aid or establishing tax credits, to reduce property tax revenue collected for schools and taking steps necessary to ensure any such program which requires a constitutional amendment be printed on the November 2024 ballot, or as soon as possible thereafter;
15. Establishing revenue caps that limit the authority of City and County governments to collect property tax revenue; and
16. Appropriating funds to the Legislative Council for the necessary expenses incurred by the Legislature due to the convening of the extraordinary session herein called.

NOW, THEREFORE , I direct members of the Legislature of the State of Nebraska be notified of the convening of this extraordinary session by presenting to each of them a copy of this proclamation;

IN WITNESS WHEREOF , I have hereunto set my hand, and cause the Great Seal of the State of Nebraska to be affixed this 24th day of July, in the year of our Lord Two Thousand Twenty-four.

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