Senators Claim Taxpayers Will Miss Out On Property Tax Credit For One Year

By Gordon HopkinsNebraska Senators have responded to a claim that LB (Legislative Bill) 34, which was intended to provide property tax relief for Nebraskans will actually cost some taxpayers a tax rebate.LB 34 front loads a 30 percent property tax credit that goes to the schools, rather than requiring taxpayers to claim it as a credit on their state income tax return.Front loading the credit was intended to fix that problem. However, according to a press release from three state senators, Steve Erdman (R-District 47), Steve Halloran (R-District 33), and Justin Wayne (D-District 13), “Because the language of the bill put an end to the rebate beginning January 1, 2024, taxpayers will not be able to claim the 30 percent property tax rebate that is owed them on their 2024 income tax return.” Tom BrewerA special session of the Nebraska Legislature was held earlier this year at the behest of Governor Jim Pillen to provide tax relief. The governor’s package did not garner enough votes and LB 34 was adapted instead.Senator Tom Brewer (R-District 43) is quick to point out that the version of LB 34 that passed is substantially different from his original proposal. Senator Brewer told FJN during a phone call on Wednesday, September 11, “If they would have left my bill alone as it was originally, it would have been pretty easy to defend, because none of this would have happened.”“Unfortunately, if you are the originator of the bill,” said Brewer, “you still get stuck with your name on it. Even if you didn’t agree with the bill, it’s still your bill.”Brewer believes the assessment of the three senators is probably correct, “I will tell you that Halloran, Erdman and Wayne spent a lot of time working on it, and had their staffs go and research it to try and make sure what they were putting out was accurate. So, I think they probably have found a glitch in the bill. And obviously there’s not going to be an easy fix to the legislation, and the front loading was part of what was structured with the bill, as I understood this amendment.” Lou Ann LinehanSenator Lou Ann Linehan (R-District 39) is chair of the Revenue Committee. She told FJN on Thursday of last week, “So, I am beyond frustrated, frankly.”“We, the state, have a budget. We can’t spend more money than we’ve got. We have a checkbook, just like every other Nebraskan has a checkbook,” said the senator. “So, when you pay your property taxes for 2024 and 2025, they will be less than you paid last year by 30 percent. But we can’t also then let you deduct property taxes paid in 2024 from your income taxes. Front loading means paying up front what we had been doing was back loading. two years later. We don’t have enough money to do both.”Linehan also disputed the suggestion that senators did not understand the impact of what they were voting for, “You can either front load or back load, and the idea that people are confused or they didn’t know what we were doing, it’s in every fiscal note that was produced that we were taking that money and front loading it. It is better for the taxpayer.”“The real kind of disappointment is, people are getting down in the details of something when the big picture is, from the time my class, the legislature got here in 2018 the first property tax credit bill that’s always been on your statement was $120 million, or 124 million maybe. It is now going to be almost one billion by 2023,” said Linehan. “The new front loaded one that was an income tax credit, that’s going up to a billion dollars by 2030. So, we are providing huge property tax relief. And people are complaining.” Tom BrandtSenator Tom Brandt (R-District 32) was in Fairbury on Sunday at Cedarwood Assisted Living’s 20th Anniversary celebration. FJN took the opportunity to ask him about the bill.“This whole special session has just been difficult for a wide variety of reasons. So, we started off, the governor had this massive bill. We introduced 80 bills over 20 constitutional amendments. The governors died right away,” said Brandt. “So, she (Senator Linehan) selected Brewer’s LB 34, which had nothing to do with anything, quietly put what we see as the bill, what she thought was possible, put it in there, put all the procedural amendments against it first, so that we could control the narrative. And that’s how what happened happened.”Brandt suspects that some of the difficulty is confusion about what year propriety taxes being paid are actually for, “When you get your December statement, the taxes are due December 31. That’s when they’re due. Less than 20 percent of the people in the state pay when they’re due. A lot of people pay for income tax reasons, because it’s a deduction off my income tax. So they need the deduction. And usually, if you’ve always paid in December, you just do that. The vast majority, I would say over 80 percent of all properties in the state and people pay delinquent. Delinquent is when I pay half May 1 and half September 1.”Brandt said, “And what happened with LB 34 is, they put a hard date of implementation of January 1 of 2025. So, the taxes that I as a farmer, and virtually all the farmers in the state, paid in 2024 were my 2023 taxes. So, I paid my 2023 taxes delinquent in 2024 expecting to get my rebate in March of 25.”“You no longer have a state income tax credit. It now becomes a property tax credit,” explained Brandt. “Most people that have a house mortgage for 20 years at the bank, they don’t even know what their property taxes are because it’s in their mortgage payment. All the finance companies in the state have gone from paying in December to delinquencies. They were counting on getting that money back. They’re going to have to go back to their mortgage people and say, we need more money for me, because you don’t get to refundable state income tax credit. And so, that’s where it’s really blowing up.”Senator Brandt is working on a possible fix for the 2025 Legislative Session but is dubious that he will be able to get it through, “I don’t think I can find 32 votes to fix it. I just don’t see it, and that’s what it’s going to take.”

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