This is a big week for Nebraska landowners, business owners, farmers and ranchers. A special session of the Nebraska Legislature is expected to convene July 25 in Lincoln to tackle an issue high on the list of many farmers in the state: property tax relief.

There were plenty of wins for Gov. Jim Pillen to tout in his Sine Die address to the Nebraska Unicameral on April 18. But one of his goals — property tax relief — remained elusive, and he promised in that address to call legislators back into a special session this summer to grapple with it.

Tax relief debate

For farmers, significant legislation was passed in the spring session, including a measure that provides incentives for farmers to reduce nitrogen use (LB1368) and another bill to update restrictions on foreign ownership of land in the state (LB1301).

But going into the session, Pillen had an original goal of a 40% property tax reduction. Late in the session, a scaled-down version of LB388 called for hikes in sales tax, removal of some sales tax exemption and more restrictive property tax caps on school districts. This measure was withdrawn on the last day of the session when proponents knew they didn’t have the votes.

Pillen expressed his disappointment in his Sin Die address, saying, “I appreciate the efforts of the Revenue Committee, and particularly Chairwoman [Lou Ann] Linehan, who worked hard and thoughtfully to bring a bill that would reduce property tax by 40%. They identified revenue that would support that cut and provide a better balance to our state’s entire tax base.”

Related:Still waiting on property tax relief

He blamed special interest groups for derailing the tax relief efforts, saying in his address, “This is a failure for all hardworking, commonsense Nebraskans who say at every turn their top priority is property tax relief.”

Calling the session

In another statement July 12, Pillen laid out his priorities for the special session. “Specifics of the plan have been cultivated by talking to citizens and senators,” the statement said. “With your input, we have created a bold plan that will put a hard cap on property tax collections; cut state spending by $360 million to help finance this plan; cut property taxes by 50%; and invest more in public education.”

Pillen continued, “We need to cut through the distractions and focus on what is important. One of those things is ensuring we are not pricing lifelong Nebraskans out of their homes. The second is providing a future for our children where they feel they can chase the dream of raising their families in-state, without paying exorbitant property taxes as a result.”

Related:How did ‘one-house’ legislature start in Nebraska?

GOVERNOR’S GOALS: Gov. Jim Pillen of Nebraska hopes to drastically reduce property taxes in the state during a special session that convenes July 25 in Lincoln. (Photo by Curt Arens)

While farmers and ranchers may agree on the need for property tax relief, there is room for debate on how that relief is accomplished and what impact it will have not only on landowners, but also on rural school districts and other entities that rely on property taxes for funding.

Keep agriculture as the focus

Nebraska Farm Bureau president Mark McHargue says, “Farm Bureau has and continues to be a leading advocate for structural reforms to deliver property tax relief for Nebraskans. As such, we appreciate the governor making property tax relief a top priority for the state and the discussions senators are having to work toward solutions.”

He adds, “Agriculture is the largest driver of the state’s economy. As we head toward an anticipated special legislative session on property taxes, we expect there will be many ideas presented. It is imperative that through this process we do no harm to agriculture.”

McHargue notes an appreciation for the discussion around school funding and acknowledges that Farm Bureau has long been a proponent of the idea that the state should play a more involved role in funding fundamental education for every student, not just students who attend districts that benefit from state equalization aid.

“Similarly, we have been consistent in our position that imposing new taxes on inputs used in agriculture and manufacturing operations, such as machinery and equipment is bad tax policy,” McHargue explains. “That would negatively impact economic development, resulting in increased expenses for both producers and consumers of goods as taxes accumulate.

“We believe tax reform discussions should center around efforts to reduce spending, implementation of stricter caps and budget limits on local governments, enhancing government efficiency, and expanding the sales tax base to encompass a wider range of end consumer goods and services that are commonly used by a significant portion of Nebraskans.”

He adds, “We look forward to working with state lawmakers and the governor to find solutions that fit parameters of good tax policy, while delivering meaningful property tax relief for Nebraskans.”

Concerns over ag taxes

Nebraska Farmers Union president John Hansen notes a similar concern. “Special sessions are usually in response to a clearly identified problem and get called when there is a legislative solution and the votes to support it,” he says. “The outcome of this special session is less than certain.”

Hansen continues, “While we welcome the focus on how our state reduces its overuse of property taxes, we also want to make sure we end up with a more fair and balanced state tax system that is based on good tax and economic policy. Taxing ag and manufacturing inputs is not good tax or economic policy, and we do not support it.”

Assessing the plan

This is also the concern for Center for Rural Affairs policy director Jillian Linster. “It’s impossible to assess the pros and cons of a plan we haven’t yet seen in full,” she says. “One of the ideas circulating that is most concerning from the rural perspective is the proposed 2% on agricultural equipment, which would be devastating to farmers and have ripple effects on the local economy.

“The Center will be monitoring the special session closely and working to supply resources to senators to help them measure the potential impacts of the governor’s proposed plan on their districts and constituents.”

Follow along with the developments of the special session at nebraskalegislature.gov.