Governor Pillen Scrambling For Property Tax Relief With Special Legislative Session

GOVERNOR VISITS O'NEILL - Governor Jim Pillen was welcomed by Michael Stepp of Handlebend on Tuesday afternoon.

Nebraska Gov. Jim Pillen was at the Handlebend on Tuesday as part of a statewide tour to help get the 30 to 33 legislative votes he needs for a promised special legislative session, possibly between July 26 and Aug. 15, with high property taxes in the state. 

Pillen plans to offset $2 billion in property taxes. He is asking Nebraskans to let lawmakers know people can't sustain property tax loads. He said property owners could spend $6 billion a year on property taxes in three years, which will have doubled in a decade. 

Pillen's goal is for the Unicameral to pass about $750 million in already approved income tax credits for property taxes paid. He said another $248 million would come in property tax relief from having the state pick up the tab on community colleges to reach the first billion dollars in property tax relief. 

Pillen would also like lawmakers to consider a 1-cent increase in the state sales tax, which would raise nearly half a billion dollars. For the rest, he would like to see the state exempt fewer items from the sales tax or "broaden the base." He made similar proposals leading into the spring legislative session. 

"Lawyer services, veterinary services, manufacturing, advertising, but also inputs for manufacturers, we tax that at 2%," he said. "Farming, I understand that we tax inputs to put a corn crop in at 2%... broad base, tax decrease." Pillen's taxing targets include increasing the cigarette tax and vaping products and imposing new sales taxes on other items, such as pop and candy, pet services by veterinarians, digital ads, and dry cleaning.

Lawmakers balked at passing these proposals this spring, with some opponents calling them a "massive tax increase." 

Pillen said a 1-cent sales tax increase would also help the state address an $80 million shortfall with the Department of Transportation due to higher inflationary costs in road construction. 

John Gage of Americans for Prosperity of Nebraska said the state struggles to compete on taxes because every level of government in Nebraska spends too much money. He pressed the governor to find solutions that do not increase one tax to lower another.

Pillen calls criticisms of his proposals misguided, including from his predecessor as governor, U.S. Sen. Pete Ricketts. He said he knows the state government will have to set caps on local spending to get relief to taxpayers.

His proposal would cap local government at 3% or the consumer price index to make it manageable. However, some have questioned how effective those caps would be if they make exceptions for public safety costs and roads.

Pillen also  proposes cutting $350 million to $500 million from the state government "by running it like a business." 

Pillen would need 33 votes to pass property tax relief over a filibuster or 30 votes to change legislative rules and avoid a filibuster. Although his office mentioned having a special session in July earlier this week, he offered no clear timeline Friday for when he would call one this year. 

Governor Jim Pillen called for a 40% reduction in state property taxes in 2024. He is asking the Nebraska Legislature and chambers of commerce to partner in achieving that goal, stating it is necessary for all Nebraskans.

"We are having an iconic tax crisis in the state," said Gov. Pillen. "We need to buckle up our belts and go to work on this. Property tax is one of the biggest deterrents to bringing people to our state. We rank sixth in property tax, and we need to change that. Our current property tax structure is not set up for our state to grow."

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