Time Is Running Out For Governor’s Tax Package

By Gordon HopkinsWith an end date of April 18 for the current session, time is running out for the Nebraska Legislature to pass Governor Jim Pillen’s tax package.The package has been returned to the Revenue Committee. The committee is meeting behind closed doors, so little information is available at this time. Pillen has made property tax relief the cornerstone of his administration and has threatened to call the legislature back into session if a deal is not reached. Concerns of County OfficialsThe governor’s tax package has the potential to greatly impact county governments. As a result, the board of NACO (Nebraska Association County Officials) has paid close attention to LB (Legislative Bill) 388 and its companion bill, LB1331. While NACO is supportive of Governor Pillen’s intention to reduce property taxes, they have expressed concerns that any funding lost due to the proposed tax cuts be replaced with an alternative source of funding. NACO officials also oppose the loss of control at the local level, in particular any caps on counties’ ability to raise funds via taxes. On Friday, April 5, 2024, Jefferson County Commissioner Mark Schoenrock issued a statement, “A Revenue Committee amendment was offered to LB388 that would increase sales taxes and eliminate certain sales tax exemptions to generate funds for property tax relief. LB388 had been introduced last year as a shell bill in case it was needed by the Revenue Committee. The sales tax increase met with opposition and the committee amendment was not adopted before cloture was invoked. The shell bill was advanced from General File with hopes of finding a funding solution before the second round of debate. Some senators suggested that delaying the income tax cuts adopted last year might be an alternative source of funding.” Concerns of School OfficialsSchoenrock said, “The second bill of the package, LB1331, advanced from General File 45-0 on Tuesday. The bill originated in the Education Committee and as amended would replace the current refundable income tax credit for school taxes paid with a front-loaded credit that would appear as a line-item on property tax statements. It would establish a new school funding formula that would provide additional state aid per student. Without the funding source proposed in LB388, the additional state aid cannot be implemented.”LB1331 would change the Tax Equity and Educational Opportunities Support Act (TEEOSA), the formula that funds public schools. FJN reached out to school superintendents to ask about how they viewed those changes. Most indicated they had insufficient information to say how the changes would impact local schools. Eric Miller, Superintendent of Thayer Central Community Schools, said, “I hesitate to make any predictions on what is good or bad for our district at this point. If I am counting correctly this is the third proposal I have seen in the last week involving TEEOSA, school funding, and a property tax relief package. I am still looking for clarification on some items in this proposal and I know there are many questions that must be answered yet in the legislature. At this point, until those questions are answered, and a more ‘concrete’ Model is produced, I’m not very comfortable stating what impacts it will have for Thayer Central.”Sean Molloy, Superintendent of Fairbury Public Schools, echoed Miller’s answer closely, “The property tax relief package (LB 388 & 1331) are on Select File, but there are still many questions that must be answered. At this point, until those questions are answered, and a more concrete Property Tax Authority Model is produced, I’m not comfortable stating what impacts, whether positive or negative, it will have on Fairbury Public Schools.” According to Dr. Chris Prososki, Superintendent of Southern Schools District, “The state legislature recently voted down the 1 (one) cent sales tax increase in LB 388 that was intended to help fund LB 1331, and this amounts to around $200 million dollars of lost revenue to fund LB 1331. With that being said, my biggest concern is (1) being able to actually fund LB 1331 and (2) the suitability of LB 1331 with the recent passage last session of both individual and corporate income tax reductions in the years ahead.”

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