Failing on Property Tax Relief

As I write this article it is the 14th day of the Unicameral Legislature's special session for property tax relief and it is still ongoing. 81 bills have been introduced during the special session to deal with taxes while 24 resolutions have been introduced to change the Nebraska State Constitution. Each one of these bills and resolutions has had a public hearing.

Most of these bills were referenced to the Legislature's Revenue Committee. So, the members of the Revenue Committee combined several ideas from these bills into the Governor's bill and advanced LB1 to the floor for debate. That bill was 144 pages long, and it did not have enough support to advance to the next round of debate on Select File. So, the members of the Revenue Committee went back to work over the weekend.

On Monday, August 12, the Revenue Committee amended their new plan into a bill by Sen. Jana Hughes of Seward. After several hours of debate on the floor LB9 also failed to garner enough support to advance to the next round of debate.

Finally, the Revenue Committee decided to scale back their proposal by amending yet another bill. This time they decided to amend their ideas into Sen. Tom Brewer's bill, LB34. The strategy of amending a different bill enabled to Revenue Committee to avoid debating deleterious motions which had already been filed on previous bills.

The amendment to LB34 made two important changes. First, it front-loaded the property tax credit which had already been made available to taxpayers back in 2020 under LB1107. That bill had already allowed property owners to reclaim 30 percent of their property tax statement as a credit or refund on their state income tax return. However, many people were not claiming the credit because they did not know about it or they had difficulty filing the necessary paperwork. Once LB34 passes into law that tax credit will be automatically deducted from each property tax statement, eliminating the need for taxpayers to file the paperwork. Doing it this way makes much better sense for taxpayers who otherwise would have to pay their outrageous property tax bills and then wait six months for a refund.

Second, the bill places spending caps on the political subdivisions of the state. The Property Tax Growth Limitation Act contained in an amendment to the bill limits the levying authority of political subdivisions by capping any increases by zero or the inflation rate. Another amendment that was adopted into the bill allows a political subdivision to override the cap by holding a special election of the people during an odd numbered year in the month of May.

What is ironic to me is that I had introduced an amendment with these same ideas during the regular session of the Legislature earlier this year, but the Legislature failed to adopt it. At that time my amendment only had support from 23 State Senators, so it failed by only two votes. Had we adopted my amendment, the special session of the Legislature would not have been needed.

The bottom line is that while LB34 contains some good ideas, it will not deliver the kind of property tax relief that Nebraskans really need. The end result is that property taxes will continue to go up and LB34 will only give taxpayers a slight decrease in the amount that their property taxes will go up next year.

The EPIC Option Consumption Tax remains the best solution for Nebraska's broken tax system, but it will be up to the people to put the measure on the ballot for the year 2026.