Governor’s Tax Package Defeated (For Now)

Pillen Will Call Special Session 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. As a result, the governor 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.”Thursday, April 18, was day 60 of the short session.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, of 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.”Governor Jim Pillen remains devoted to his pledge of a 40 percent cut to property taxes in Nebraska. 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.One of the most controversial elements of the bill was a one cent sales tax hike, which was removed from the bill last week.Taxing Digital AdsAnother 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 Megan Hunt and Senator Julie Slama each said small businesses that depend on social media for advertising would suffer.Senator Slama, who led a final-round filibuster of LB 388, 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 is 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 ExemptionsOther tax exceptions to be eliminated were on 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. Some senators, such as Brad von Gillern (R) of Lincoln, 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, “That ad said groceries will be taxed.”Von Gillern pointed out that LB 388 does not tax all groceries, such as food, “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.Governor's ResponseGovernor Pill told the legislature during his speech at the end of the 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 working 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.”

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