Legislative Session Ends Without Passing Property Tax Package

By Gordon HopkinsGovernor Jim Pillen’s tax package, LB (Legislative Bill) 388, was unable to make it through the final day of the 2024 session of the Nebraska Legislature, which ended on Thursday, April 18.The governor remains devoted to his pledge of property tax relief in Nebraska. That is why he has called for a special session later this year, saying after the legislature closed, “I will call as many sessions as it takes to finish the long-overdue work of solving our property tax crisis.”Jefferson County Commissioner Mark Schoenrock, who also serves as the Southeast Director of the NACO (Nebraska Association of County Officials) Board, issued a statement on Thursday, “Our NACO board, on which I serve as the Southeast District Director representing 17 counties of southeast Nebraska, met yesterday with Governor Pillen and we re-committed to work with him and his staff, the Legislature and other key Nebraska stake holders to achieve meaningful tax policy reform for all Nebraskans while ensuring that Nebraska county government has the revenue needed to provide critical services to our fellow citizens. With LB 388 being removed from consideration on this the final day of this session, it appears the Legislature will be in special session to address this issue. NACO will continue to be an instrumental part of this process as we go forward. Senator (Robert) Clements is leading an interim study of which we will be part.” LB 388 came under fire from critics on both the left and right of the political spectrum and underwent a number of amendments in an attempt to make it more palatable to legislators. For example, one of the most controversial elements of the bill was a one cent sales tax hike, which was removed.Tax ExemptionsAnother controversial element of the bill was the elimination of a number of tax exemptions, such as digital advertising. The removal of this exemption has been met with criticism from both liberals and conservatives. Senator Julie Slama, District 1, said small businesses that depend on social media for advertising would suffer. Senator Slama said, “LB 388 is not a solution, nor is it sound policy. The core funding for this bill is a digital ad tax that is probably going to be found unconstitutional and cost our state far more in legal expenses and in interest than in any of the relatively small amounts of money that we are going to be able to collect before an injunction is filed against the collection of the tax.”Slama has previously pointed out the only other state that has such a tax, Maryland, which according to her, is facing 20 lawsuits. Slama said she agreed that property taxes are too high but, “I would much rather handle this particular issue, the state tax code, in a special session.”Other tax exceptions to be eliminated included pop, candy, dry cleaning and veterinarian services. This proposal led to a last minute round of newspaper and television advertisements opposing the bill. Some senators spent their limited time at the podium not debating the merits of the bill but in attacking those ads. Senator (R) Brad von Gillern, District 4, accused those ads of being misleading.“You get the worst of me when you lie to me,” said Von Gillern. “In the past week, lie after lie after lie has been told about 388.”Of an ad that appeared recently in some newspapers, Von Gillern said, “That ad said groceries will be taxed.”However, Von Gillern pointed out that LB 388 does not tax all groceries, “Now, you can define half truths any way you want but, to me, a half truth is a half lie, and a half lie is just as good as a full one.”Inheritance TaxAnother bill that did not make it through was LB 1363, which paid for a cut in the inheritance tax with documentary stamp taxes.While NACO has been supportive of Governor Pillen’s intention to reduce property taxes, they have expressed concerns that any funding lost due to proposed tax cuts, such as to inheritance tax, be replaced with an alternative source of funding. Schoenrock told FJN, “LB 1363, in part, will reduce inheritance tax rates to 8 percent from 11 percent for Class 2 beneficiaries and 15 percent for Class 3 beneficiaries. In exchange for the lower tax rate, the portion of the documentary stamp taxes collected and retained by Nebraska county government would be increased from .$50 to $1.15 per thousand dollars of value on transfers of property. This will be a significant rate reduction in inheritance tax for Nebraskans while ensuring Nebraska county government retains the revenue it needs to continue providing critical services to our fellow citizens.”Schoenrock added, “With LB 1363 being removed from consideration also this afternoon, this will now become part of that larger tax reform issue as well.” Winner Take AllTaxes are not the only issue that the governor wants to take up in a special session. Nebraska is one of only two states, along with Maine, that divide Electoral College votes by congressional district rather than statewide.Pillen wants to see the state move to the “winner take all” rule that the majority of states follow.Governor Pillen said, “Property tax relief may not be this legislature is only unfinished work. I will not hesitate to call a special session to complete other unfinished business, including winner take all.”In 2020, President Joe Biden one a single electoral vote from Nebraska, while the remainder went to candidate Donald Trump. In 2016, Trump won a single electoral vote from Maine. Governor’s ResponseGovernor Pill told the legislature during his speech at the end of the session, “ Because of this legislature’s inaction this morning, Nebraskans will not see a penny of property tax relief out of this session.”“Every Nebraskan agrees that we must broaden our sales tax base and close the loopholes, the carve outs and favorite treatment defended by lobbyists and special interests. Every Nebraskan. Yet, this legislature failed to take even a modest step to correct their imbalance. As I promised the hard workings Nebraskans across the state and, as most of you have promised to your constituents, together, we’ll fix it this year. Fortunately, we still have a chance to do that. We will work very hard to make sure this body acts on the truth, on the truth about property taxes, not the misstatements pressed by special interests.”“Enjoy halftime,” Pillen said to the senators. “We’ll see you again here soon.”

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