One former state senator contended Tuesday that Gov. Jim Pillen's plan to cut property taxes 50% by expanding sales and other taxes has support across Nebraska.Â
"The vast majority of Nebraskans are behind him in the struggle," said Dan Hughes, who farms near Venango. "The property tax crisis in Nebraska needs to be fixed."
But opponents accounted for the vast majority of people who turned up to testify at a public hearing on LB1, which encompasses the key tax-related pieces of the governor's plan.Â
Nine hours into the hearing during the special session on property taxes, the Revenue Committee had heard from five times as many critics as supporters and many more opponents were waiting for their turns to speak. Combined, they called for changes in almost every provision of the sweeping proposal.Â
Local government officials issue warnings about the plan
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The first portion of LB1 would cap property tax revenues collected by cities and counties, bringing objections from a number of city and county officials.Â
Stephen Curtis, the City of Omaha's finance director, was among those who criticized the caps. He said they could hamstring Omaha's ability to cope with economic ups and downs or to deal with rising costs of city services. Although sales taxes may be enough to help out some years, they could fall short in others, he said.Â
In addition, he said lower property tax levies would hurt development projects funded through tax-increment financing, warning that the bill "would jeopardize Omaha's positive momentum."
Douglas County Attorney Don Klein said the looser caps proposed for hiring public safety staff should be broadened to include prosecutors and public defenders, while Gretna Mayor Mike Evans called for those caps to cover vehicles, computers and other equipment needed by public safety employees.
School officials criticized the proposal to create a new property tax credit, worth $2.03 billion in the first year. The credit would be aimed at offsetting school property taxes while future lawmakers figure out how to fulfill Pillen's ultimate goal of eliminating property taxes for school operating costs.
Spencer Head, president of the Omaha Public Schools Board, argued for keeping property taxes as a key source of school funding. He said property taxes offer stable funding for schools, while history has shown that state school aid is less reliable. He said state lawmakers have cut aid during economic downturns.
Liz Standish, associate superintendent for Lincoln Public Schools, said that eliminating school property taxes would jeopardize local control because it would not allow school boards to control local budgets. She also objected to the proposal to distribute the new property tax credit to taxpayers based on the valuation of their property, rather than school property taxes paid.Â
Testifiers say Pillen plan could hurt adoptions, farmers, more
The governor's proposal to increase or impose sales taxes and sin taxes on more than 100 goods and services brought the most opponents, including farm groups, business groups and various affected businesses and professions. Under the bill, money raised from the tax changes would be used to fund the new property tax credit.Â
Mark McHargue, president of the Nebraska Farm Bureau, spoke for a coalition of agriculture groups, against putting a 2-cent sales tax on agricultural machinery and equipment. A later speaker said the proposal would drive people to other states to buy combines and other equipment, which can cost up to $1 million.Â
Others objected to higher taxes on liquor, home repair and maintenance, vehicle repair, veterinary care for pets, storage and moving services, pop, candy, advertising, manufacturing machinery and equipment, vaping, consumable hemp products, massage therapy, keno, games of skill, taxi services and legal services.
Among them, John Sennett, a Broken Bow attorney, said the proposed tax would have consequences for his clients. He said he doesn't want to have to tell a young couple that the cost of adopting a child just increased because of the new taxes.Â
Melanie Kirk, executive director for the Nebraska Coalition to End Sexual and Domestic Violence, offered a hypothetical scenario showing how the sales tax expansion could affect people.
The story began with a woman, Laura, whose husband kicked down her door and disabled her car. Repair of both would now be subject to tax. Laura took an Uber — newly taxed — while her car was being fixed. Meanwhile, someone broke into her home and hurt her dog. Veterinary care for the dog would be taxed.
The next developments in the story had Laura paying tax for a rental agent to find a secure place to live, storage services before she could move in, a moving company, a new prepaid phone plan and finally collection services after her husband drained their bank account.
Pillen’s plan had some fans as well. Deb Kelly of O’Neill said she knew the measure would require tradeoffs but she and her family would be willing to pay their fair share of new taxes to bring down property taxes.
“I’m just asking people to focus on what’s good for the whole playground,†she said.
Another proponent, Mark Beiting of Gretna, said his wife wants to keep their sons and grandchildren nearby but two sons are considering moving to Iowa because of high Nebraska property taxes.
“My wife begins to sob every time she hears this discussion,†he said. “You’ve got to take action."