A group of Nebraska senators said they will support legislation allowing homeowners and farmers who are unable to claim a credit for their 2023 property taxes to recover those funds next year.
The bill, ready to be introduced after the Legislature convenes on Jan. 8, 2025, would provide relief to taxpayers who were blocked from claiming the credit this year, according to Sen. Steve Erdman of Bayard.
Erdman and five other senators, both Republicans and Democrats in the officially nonpartisan Legislature, have signed onto the plan.
"Nebraskans are entitled to receive the credit owed to them for property taxes paid in 2023," the senators wrote. "(We) believe that emergency legislation can and should be passed early in January 2025 to resolve this oversight."
This summer, during a special legislative session called by Gov. Jim Pillen to reduce Nebraskans' property taxes, the Legislature passed a bill (LB34) increasing the money available to Nebraska taxpayers.
LB34 also made the property tax relief program apply automatically instead of requiring taxpayers to apply for the credit, which is equal to 30% of the taxes paid to local school districts, when filing their income taxes.
But the bill, which was signed into law at the end of one of the longest special sessions in the history of the Legislature, fell well short of the goal set by Pillen and several lawmakers.
It also retroactively ended the existing property tax credit program on Jan. 1, 2024, leaving thousands of property owners across the state unable to receive a credit for their 2023 taxes.
Backers of LB34 said the bill will ultimately result in more Nebraska taxpayers paying less in property taxes moving forward. The Legislature put $750 million into the property tax relief program during the special session.
They also said that while taxpayers will not be able to apply for the credit on 2023 taxes, they will see the deduction on their tax statements this year, which they have described as a simple change in timing.
Sen. Lou Ann Linehan of Elkhorn, who chaired the Revenue Committee responsible for drafting LB34, said allowing taxpayers to receive a credit and a deduction in the same year could have cost the state as much as $1.5 billion — though others disagree with that assessment.
Linehan will not be in the Legislature in January due to term limits. Sen. Brad von Gillern of Elkhorn, also a member of the Revenue Committee, did not respond to a request for comment.
Erdman, who did not vote for LB34 and has been a prominent critic of his colleagues for passing a bill without understanding its full implications, said the Legislature essentially enacted a 20-22% increase for many taxpayers across the state.
"You, personally, are going to fund your own property tax relief in 2024 with the credit you didn't get in 2023," said Erdman, who will not be in the Legislature in January after being forced out due to term limits.
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"I don't know how to explain it any clearer than that," he added.
The Bayard senator, who represents much of the Panhandle, was joined by Sen. Brian Hardin of Gering, the bill's likely sponsor, as well as Lincoln Sen. Danielle Conrad, Sen. Tom Brandt of Plymouth, Sen. Loren Lippincott of Central City, and Sen. Jen Day of Gretna.
"We are now encouraging all Nebraskans to begin contacting their State Senators, urging them to support this important piece of legislation for next year," the letter states. "We believe the good citizens of Nebraska should not have to shoulder a financial burden created by the Legislature."
The potential for the Legislature to act was welcome news to Bill White, president of The Austin Company, which manages more than 150 farms across Nebraska from its headquarters in Milford.
White said most farmers elect not to pay their property taxes in December, waiting until they sell their crops and have the cash to pay their taxes, meaning they were forced to pay thousands of dollars more than what was expected.
While making the property tax reduction automatic was a welcome change, White said many farmers have been left scrambling to find extra money to pay their taxes this year.
One Seward County farm with pivot irrigation that paid about $6,000 in taxes to the local school district in 2023 should have received a credit of about $2,000, but won't this year, he said, while on larger farms, the amount lost by ending the tax credit could reach as high as $10,000-$15,000, he added.
"They keep telling us, 'You're going to get a credit in December, it will show up on your bill for 2024,' but that doesn't help the 2023 credit that we missed out on," White said.
Complicating matters are corn and soybean prices, said White, who has managed farms for more than a half-century, which have fallen well below what those commodities were receiving a year ago.
A bushel of corn in October 2023 was going for more than $7; Friday's prices were between $3.50 and $4 depending on the region of the state.
White said several state lawmakers representing areas where he manages farms "weren't quite aware" of the problem when he reached out to them about the issue.
"I think they are becoming very aware now," he said.
Erdman and others who signed onto the plan said lawmakers need to be held accountable for their mistake and to make the people of Nebraska whole, with the drafted legislation to serve as a starting point.
"This problem can be easily rectified by passing legislation early next year," he said.