Like a farm pond during a hot, dry summer, Nebraska Gov. Jim Pillen’s hope for major property tax relief in this summer’s special session shrunk considerably.

Legislative Bill 34, passed on the session’s last day on a 40-3 vote, offers only 3% to 3.5% relief on average statewide. Pillen’s call for the special session on July 25 sought the Legislature’s backing of his plan for at least a 40%-on-average cut in property taxes. 

Right direction

In a news release after the session, the governor said the bill that passed was a step in the right direction, but he vowed not to give up. There is much more to do to lower property taxes that he says are “chasing seniors out of their homes and killing the dream of homeownership for young people.”

LB 34 has two main provisions. For one, it creates a new state school district property tax relief credit to make it easier for taxpayers to get the credit. The program, as set up originally, offers refundable income tax credits for a portion of property taxes paid to schools, but many taxpayers have not claimed or requested the credit when filing their taxes.

“We’re making sure that the 45% of Nebraskans who have not been getting that credit will now receive a 20% property tax cut,” Pillen said in the news release.

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The revised credit program now will be a part of property tax statements next year and apply toward 2024 tax payments as a deduction for the final property tax bill.

Mark McHargue, president of the Nebraska Farm Bureau and a Merrick County hog and crop producer, says that Nebraska farmers and ranchers who have claimed the refundable credit won’t see much new in the way of property tax relief. He describes the results of the special session as “limited property tax relief, but we did not go backwards.”

The ability for all property owners to get the school district property tax relief credit is a positive move, he adds. “Not having to file for the credit and instead having it on the property tax statements is a big step,” McHargue says. 

Limits to taxing authority

LB 34 also limits the taxing authority of cities and counties year over year to “the greater of inflation or 0%.” There are exemptions for law enforcement, fire, emergency medical services, corrections, and county attorneys and public defenders.

State Sen. Lou Ann Linehan of the Elkhorn area, who serves as chairwoman of the Revenue Committee, says the “only real to answer to fixing this” is putting caps on spending. “The reason property taxes are high is because we have too many taxing authorities spending too much money.”

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LB 34 passed without instituting any new sales taxes. During the regular session of the Legislature, Pillen called for increasing sales tax on a number of goods and services to cover the costs of tax relief, but that plan was met by strong opposition.

To help offset costs associated with LB 34, two budget bills, LB 2 and LB 3, were introduced on behalf of the governor. LB 2 provides for about $117 million in budget cuts, while LB 3 calls for $22 million in cash fund transfers and increased fees, according to the governor’s statement. Another $46 million would come from state cash reserves.

“We are gearing up for the 2025 Legislature for real tax relief for Nebraska farmers,” McHargue says. “[Farm Bureau members] will do what we’ve done for 107 years: work with state senators for sound tax policy for farmers and ranchers of Nebraska.”

Learn more at nebraskalegislature.gov.