Gov. Jim Pillen expressed disappointment Monday about the special legislative session he called to address property taxes but said it will be up to Nebraskans to judge what lawmakers accomplished. Â
"From my seat, I know we’re happy about a couple things but we still got an awful lot of work to do to make sure we have farmers and ranchers competitive, we have homeowners that can stay in their home and young people can fulfill the dream of owning their own home," Pillen said.Â
The governor commented in response to questions from the host and a couple of the callers during his monthly radio call-in show. The live show aired one day before the Nebraska Legislature is slated to take a final vote on a stripped-down version of Pillen's property tax plan.Â
LB34 would ensure that property taxpayers benefit from an existing property tax relief program and cap property tax collections by cities and counties. The measure would offset about 3% of property taxes levied statewide, far less than the 50% reduction that Pillen initially sought.
Despite the setbacks, the governor promised to keep working on the issue.Â
"We won't give up," Pillen said. "I’ve inherited the property tax crisis as your governor and together, we’ll get it fixed. We have to, because if we don’t our state is going to shrink and that’s not acceptable."
His plan called for the state to take over funding of school operations and to pay for the plan by imposing or raising sales and "sin" taxes on more than 100 goods and services. But the plan faced stiff opposition from a wide variety of groups and only got out of the Revenue Committee after being scaled back.Â
Even the scaled-back plan was dropped before reaching a vote of the full Legislature after it became clear it lacked the votes to advance.
Pillen started off his comments Monday by saying he was grateful for "27, 28 legislators that really, really worked hard to try to solve the property tax crisis" during the session. But he lamented others who opposed his proposal.Â
"A couple people can have this idea, a couple three people can have that idea" and the result is "really, really good sound policy gets off track," he said.Â
During the radio show, Pillen continued to promote the ideas in his original plan. He did not comment on ideas raised by Jacob, a caller from Lincoln, who asked about two of the alternative property tax relief proposals senators offered.
Jacob was interested in a proposal to exempt the first $100,000 of valuation on owner-occupied homes from property taxes, along with a constitutional amendment that would allow for owner-occupied homes to be taxed at less than 100% of assessed valuation.Â
Pillen responded by talking instead about the benefits of "front loading" an existing program that offers income tax credits for school property taxes paid, as LB34 would do. The bill would create a new School District Property Tax Relief Credit program to replace the income tax credits.
The new credits would appear on property tax statements as a deduction from the final tax bills. The change would benefit property taxpayers who do not claim the income tax credits now, while providing no new savings to those who have been claiming the credits. It would, however, provide the savings upfront and prevent the hassle of claiming income tax credits months later.
The governor also touted the other key part of LB34, which would limit growth in property tax collections by local governments to the greater of inflation or zero, after accounting for newly built homes and businesses and newly annexed property.
The bill would measure inflation using an index based on government expenses, rather than the Consumer Price Index, which is based on household expenses. The government index has generally been higher than CPI over the past 20 years.
Taxes collected for public safety, such as law enforcement, fire fighting, emergency medical services, prosecutors and public defenders, would be exempt from the caps, as would money needed for emergencies and bond payments.
The special session, which began July 25, is likely to end Tuesday. Along with LB34, lawmakers are scheduled to vote on passing a pair of bills that would trim state budgets and tap various state funds to cover $139 million of the $185 million first-year cost for the new school credits.Â