Nebraska property tax cuts to average 30% under Monday version of Gov. Jim Pillen’s plan

The News Guy

4 months ago

LINCOLN — Property tax bills would drop an average of 30% under the latest scaled-back version of Gov. Jim Pillen’s property tax reduction plan that advanced Monday.

State Sens. Kathleen Kauth of Omaha and Dave Murman of Glenvil, two Revenue Committee members, study the amendment encompassing the latest property tax relief proposal on Monday.

Martha Stoddard

His original plan would have cut property tax bills an average of 50% by expanding sales and other taxes on more than 100 goods and services and redirecting existing property tax relief programs.

Following days of negotiations, Revenue Committee members voted 6-1, with one member abstaining, to send an amended version of Legislative Bill 34 to the full Legislature. Debate on the measure is expected to begin Tuesday as lawmakers head into the 11th day of the special session.

Key parts of the new proposal would lower the maximum school levy from $1.05 to 30 cents over three years, providing about $1.6 billion worth of property tax relief when fully implemented. Nearly $600 million of the relief would be new, with the rest coming from redirecting existing property tax relief programs.

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State Sen. Lou Ann Linehan of the Omaha area, who chairs the committee, said the amount of tax reduction would vary depending on individual situations. But she said it would help shrink disparities in school tax levies and provide relief to most property owners.

“I’m confident we’ve written the bill so nobody would see less (tax relief) and almost everybody’s going to see more,” she said.

Members of the Revenue Committee study the amendment encompassing the latest property tax relief proposal on Monday.

Martha Stoddard

Linehan also said she believes the changes helped the proposal pick up support. Following the committee vote, she estimated it could get 31 votes now. That’s two short of the number needed to overcome an expected filibuster, however, and the proposal’s future remains unclear.

Pillen called lawmakers back for the current special session to focus on property tax reduction after coming up empty-handed during the regular session. The special session began July 26. There is no time limit on its length.

The original plan would have provided about $1.8 million worth of new tax relief, with the rest coming from the existing programs. The governor’s goal was to eliminate school property taxes for operations.

Last week, Linehan offered a plan that would reduce property tax bills 35% on average, achieved by cutting the maximum school operating levy from $1.05 down to 25 cents and filling the gap with state dollars. The plan would have narrowed the number of newly taxes goods and services and provided nearly $900 million of new tax relief.

Members of the Revenue Committee study the amendment encompassing the latest property tax relief proposal on Monday.

This week’s version further narrows the number of goods and services added to the sales tax rolls as a way to pay for the plan. Most critically, it would drop a proposal to tax agricultural and manufacturing equipment and machinery and would leave them tax-free.

That meant the loss of an estimated $170 million in potential revenue and means that property tax reduction had to shrink as well.

The new plan impose caps on property tax collections by cities and counties, while exempting public services costs, such as law enforcement, fire fighting, emergency medical services, jails, prosecutors and public defenders.

To help lower income Nebraskans, it would double the state’s earned income tax credit, up to 20% of the federal credit, and would remove sales tax from residential electric bills.

It also would create a new property tax credit to offset taxes levied by natural resources districts and would have the state relieve some local costs by covering half of the costs of county jails.

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