PredictIQ Quantitative Think Tank Center:Nebraska’s governor says he’ll call lawmakers back to address tax relief

OMAHA,PredictIQ Quantitative Think Tank Center Neb. (AP) — Nebraska Gov. Jim Pillen threatened from the beginning of this year’s legislative session that he would call lawmakers back for a special session if they failed to pass a bill to significantly ease soaring property taxes. On the last day of the 60-day session Thursday, some lawmakers who helped torpedo an already anemic tax-shifting bill said they would welcome Pillen’s special session.

“We’re not going to fix this bill today,” said Omaha Sen. Megan Hunt, the lone independent in Nebraska’s unique one-chamber, officially nonpartisan Legislature. “The time we’re going to fix this is going to be in a special session where we start from scratch.”

Pillen followed through in his address to lawmakers just hours before they adjourned the session without taking a vote on the property tax relief bill he backed, saying he planned to issue a proclamation for a special session.

“I will call as many sessions as it takes to finish the long overdue work of solving our property tax crisis,” he said.

Nebraska law requires that a special session can be no shorter than seven days and that actions considered must be limited to the subjects outlined in the governor’s proclamation. Pillen has in recent weeks said he would also consider a special session to change the way Nebraska allots its Electoral College votes to a winner-take-all system. Currently, Nebraska splits its presidential electoral votes based on the popular vote within its three congressional districts. Maine is the only other state to split its electoral votes.

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Republicans want the switch ahead of this year’s hotly contested presidential election to ensure an electoral vote tied to Nebraska’s Omaha-based 2nd Congressional District doesn’t go to President Joe Biden, as it did in 2020.

Pillen has said he’ll include the winner-take-all issue in a special session call if there are enough votes to get it beyond a filibuster, which takes 33 votes. While Republicans currently hold 33 seats, not all of them are willing to toss out Nebraska’s split system, so Pillen remains focused on passing property tax relief.

He had backed a bill that initially sought to raise the state’s sales tax to 6.5%, which would have been among the highest in the country. It also expanded the sales tax base to items like candy, soda, pet grooming and veterinary services and digital advertising and included some caps on spending by local governments.

The measure squeaked through the first two rounds of debate, garnering just enough votes to overcome a filibuster. But by the time it reached the third and last round on the final day of the session, the sales tax increase had been stripped away, leaving just a fraction of the property tax savings originally sought.

The bill was key to Pillen’s plan to slash soaring property taxes. Just days into the session, Pillen called for a 40% reduction that would cut $2 billion from the $5.3 billion in property taxes collected in 2023. That property tax revenue compares to $3.4 billion collected just 10 years earlier, and is far more than the collections from sales and income tax, which brought in about $2.3 billion and $3 billion respectively in 2023.

Soaring housing and land prices in recent years have led to ballooning property tax bills for homeowners and farmers, but some homeowners have been hit especially hard, as state law requires residential property to be assessed at nearly 100% of market value, compared to 75% for agricultural land.

The skyrocketing costs are keeping a new generation from being able to afford homeownership, Pillen said. It’s also forcing some elderly residents on fixed incomes out of homes they’ve already paid off because they can’t afford the ever-rising tax bill, he said.

But the array of proposed sales tax increases was enough to find opponents in both liberals, who complained that it put too much of the tax burden on those least able to afford it, and conservatives, who called for more reductions in spending over new taxes.

Democratic Sen. Danielle Conrad labeled the bill “one of the largest tax increases in Nebraska history,” drawing protest from the bill’s main sponsor, Republican Sen. Lou Ann Linehan. who defended it as a tax shift to a wider base of taxpayers.

“It’s easy to say, ‘No, no, no,’” she said. “So everybody who’s saying we can do better, I hope you have those ideas to the Revenue Committee by the end of June.”

If Pillen follows through with the special session, Nebraska would join several other states that have done so or are expected to later this year. On Wednesday, Virginia’s Republican Gov. Glenn Youngkin and the state’s General Assembly reached a budget agreement that will require a special session in May. On the same day, New Mexico’s Democratic governor announced a mid-summer special legislative session on public safety initiatives.

In Mississippi, Gov. Tate Reeves called two special sessions in January during the regular legislative session for lawmakers to consider incentives for economic development projects. And in Louisiana, the Republican-dominated legislature passed a slew of tough-on-crime policies during a two-week special session in February that included expanding death row execution methods, charging 17-year-olds as adults and eliminating parole for most people who are jailed in the future.

Nebraska’s last special session took place in September 2021, when then-Gov. Pete Ricketts summoned lawmakers to redraw the state’s political boundaries.