Governor Unveils Tax Plan

By Gordon HopkinsNebraska Governor Jim Pillen presented his proposal for a new tax plan intended to reduce property taxes by 50 percent at a press conference Thursday morning, July 18, 2024. This comes one week before a special session of the Nebraska Legislature is scheduled to begin. “We're running the government of the state like a business. We're decreasing spending and improving services,” said the governor. “If you'll remember, back in the fall of 2022 there was bushel baskets and bushel baskets and bushel baskets of money. We had lots of state agencies that wanted 10 and 15 percent more money. Why? Because we had the money. We all do it. It's human nature. It's nobody's fault. It's human nature. We tend to spend our own money if we have a lot. We tend to do it in government.”At the governor's side was Senator Lou Ann Linehan, District 39, who said, “This plan relies heavily on cutting spending at the state level and using that savings to bring relief to taxpayers. That is what we are already doing with our code agencies and as a state, that will be our model of doing business going forward.” Capping counties’ and cities’ property tax requests to an increase of zero percent or (CPI) Consumer Price Index, whichever is higher; The State taking over the funding of Kindergarten through 12th grade education; Raising revenue through the elimination of certain sales tax exemptions. Hard Cap on Local Spending“I'm an advocate hard cap zero or CPI (Consumer Price Index). What that means is, is when we go back and have three percent deflation, each government gets zero. They're not asked to cut, like we're doing at the state, but it's zero,” Pillen said. “Everybody's uptight about the valuations of your homes, right? We have state statute that says, whatever valuations go up, our levy goes down accordingly. No change. State statute in play. Except there's a relief valve, relief valve for every local government to override it, and we've been very, very good at that. We do it 100 percent of the time, so we have to have hard caps.” Critics of Pillen's plan have expressed concern that it takes control away from local governments. Among those critics is NACO (Nebraska Association of County Officials), which motioned to oppose a hard cap earlier this week. The motion reads, “NACO appreciates Governor Pillen’s efforts to reduce property taxes and would be a willing partner. However, the NACO Board of Directors opposes any cap of '0% or CPI, whichever is greater,' with limited exceptions. A 0% hard cap would severely limit the ability of counties to meet obligations and mandates essential for citizen safety, infrastructure, community programs, and other critical services. NACO is committed to continued meaningful dialogue with the Governor and the members of his working group and the Nebraska Legislature to ensure progress for Nebraska counties and to ensure all stakeholders have a full understanding of the ramifications of the short- and long-term impacts of the proposed changes. The NACO Board will carefully review any proposed legislation to ensure it is animated by sound tax policy.” Jefferson County Commissioner Mark Schoenrock sent a letter to southeastern Nebraska senators, expressing this concern, “While many counties have their property tax requests go up way less than CPI, the fact is that growing communities would be unable to provide the services that are required by that growth, and this would also severely affect the ability of Nebraska county government to provide essential services to our fellow citizens.” At a meeting of the Jefferson County Commissioners on Tuesday, July 16, Schoenrock noted a problem with using CPI to determine how much money local governments can raise, “That Consumer Price Index measures things that aren't necessarily bought by government. And so, there's two different things there. We're buying things that aren't necessarily measured by the Consumer Price Index.” State Funding SchoolsSchool officials worry that having the state fund schools would take away local control. However, Linehan suggested a benefit to having the state take over funding for public schools is that school boards will no longer have to deal with funding, “Local control will be maintained. They will still have school board members who can focus on student and teacher needs and learning outcomes, instead of being in the rotunda every year while we're in session, begging for money.” Governor Pillen concerred, “School board continues to be the most important elected official in the state. In my humble opinion, the difference simply is this just allows school board members and superintendents to focus on educating our kids. I've asked a lot of school board members, why did you run for school board? You know, I've yet to have anybody tell me, because I'm a TEEOSA (Tax Equity and Educational Opportunities Support Act) expert, and I can really help my superintendent figure out how on earth to balance our budget and figure this out.” Eliminating Tax ExemptionsSenator Linehan said, “We must also generate new revenue to further right size our three legged stool. This will only happen by placing sales tax on currently exempt products. The plan removes over 110 current exemptions. This may increase the final price for consumers, but they have choices on what they buy and how much they pay for what they buy and ultimately, therefore, what tax they pay.” A great many critics of Pillen's proposal claims the plan does not reduce taxes at all but simply shifts the tax burden from property tax payers to others. Shortly after the governor's press conference, Senator Julie Slama, District 1, posted on X (the social media platform formerly known as Twitter), “You’re paying far more in sales taxes, losing local control in K-12, raiding the state’s reserves (putting the state at risk of bankruptcy and destroying our fiscal stability), and will net out as paying more taxes overall. If you want to still sell your soul, that’s your choice.” Slama also accused Pillen of deliberately delaying presenting his tax plan. She wrote on X, “Pillen is waiting until the last minute to issue the call to prevent other ideas from being introduced.” Senator Carol Blood, District 3, posted on Facebook, “The Pillen plan is not sustainable, not reliable, not predictable, not equitable. It's a tax shift to the working class. I will reintroduce every property tax bill I've presented over the last eight years on day one of next week's session.”

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