Special Session Begins This Week

By Gordon HopkinsThursday, July 25, 2024, the Nebraska Legislature is scheduled to begin a special session to hash out a new tax plan that, if Governor Jim Pillen gets his way, will cut property taxes by 50 percent.Nebraska 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. NACO Opposition to a “Hard Cap”Last week, NACO motioned to oppose a hard cap. 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.”“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 at the press conference. “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.” The governor pointed out in a statement after the press conference that, “investments in public safety are protected and exempt from hard caps on local government tax collections.”While still supportive of Governor Jim Pillen’s desire to lower property tax, NACO (Nebraska Association of County Officials) has expressed concern that some of Pillen’s proposals, in particular capping counties’ and cities’ property tax requests to an increase of zero percent or (CPI) Consumer Price Index, whichever is higher, would severely limit those governments’ ability to operate.At the governor’s side was Senator Lou Ann Linehan (R-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.” Like the governor, Linehan puts the blame for high property taxes on spending, which is why she supports the governor’s plan, “It puts a curb on local spending. Local spending is the crux of the problem.”Livehan said, “If local governments want to collect more in property taxes, then that decision should be left to taxpayers. That is flexible and that is fair. It creates a pathway for community growth, but with reasonable controls.”Jefferson County Commissioner Mark Schoenrock is just one of several local officials that disputes local spending is the problem. He has previously described Jefferson County’s budget as cut, “to the bone.”In a letter to Southeast Nebraska Senators, Schoenrock wrote, “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.”“Tying the hands of local government to provide for growing communities (or communities that want to grow) and to provide for essential services to our citizens is not the answer. Just like with the debate over the inheritance tax, as well-intended as this may be, stifling the ability of local government to keep up with the rising cost of government is poor policy, and will only lead to a degradation or loss of essential services for our citizen,” wrote Schoenrock. “I can tell you first hand that after knocking nearly a thousand doors in my last election that our fellow citizens very much value these county-provided services and do not want to see them degraded or cut.” 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.” Details Remain ScarceIn his letter, Schoenrock noted, “The details of the Governor’s plan are slowly getting out, but no bill has been presented for us to review.”While having given more information about his plan at the press confernce,Pillen continues to receive criticism for the lack of specifics. Senator Julie Slama, (R-District 1), posted on X (the social media platform formerly known as Twitter), “Pillen is waiting until the last minute to issue the call to prevent other ideas from being introduced.” Tax Cut or Tax Shift?Senator 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, both conservative and liberal, have called the governor’s proposal a “tax shift,” rather than a tax cut. Senator Slama posted on X, “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.”Senator Carol Blood (D-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 8 years on day 1 of next week’s session.”“The plan proposes a significant re-invention of the way we fund public schools, and we believe that should merit the time, deliberation and collaboration necessary to get it right,” said Dr. Rebecca Firestone, executive director of OpenSky Policy Institute. “We don’t believe that a special session is the appropriate vehicle for initiating such a fundamental change.”

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