Gov. Pillen shares ‘playbook’ on plan to cut Nebraska property taxes in half

LINCOLN, Neb. (WOWT) - A week before the Legislature is expected to reconvene for a special session, Gov. Jim Pillen held a news conference on his push to reduce Nebraska property taxes by 50%.

“In Nebraska, property tax collections have accelerated at a rapid rate. In a few short years, they will reach more than $1 million a day, or $6 billion a year,” the release states. “Nebraska is among states for highest property taxes in the nation and the governor has made tax reform a central goal of his administration.”

Thursday announcement comes after the governor has been holding town halls around the state in recent weeks promoting his plan. According to a release from Pillen’s office on Thursday, he has also been having regular meetings with senators focused on the issue; about 17 of them have been meeting this summer to figure out the best path forward.

“It’s a crisis that’s been accelerating at warp speed, and it’s time to fix it,” Pillen said.

Yet even in his news conference, the governor was short on specifics, saying it’s up to the Legislature to hash it out — something they couldn’t do in the spring.

“I have great confidence with our partners in the Unicam that we will solve the crisis,” he said Thursday.

Pillen initially charged the Unicameral with coming up with a 40% reduction in property taxes. But he couldn’t find consensus, and the bill put forward in the spring session failed.

The governor came armed with poster boards and props with what he calls an “out-of-control” collision. His ultimate goal is to cut Nebrakans’ property taxes, on average, by 50% — with some getting back 65% or 70%.

6 News was told that agricultural land will see the biggest cuts. The state set up a way for Nebraskans to get a sense of how Pillen’s plan to take over school funding translates into property tax relief for their properties.

A spot-check of various properties showed that various properties around the state won’t see their property tax bills cut in half right away; 6 News learned that the full 50% cut wouldn’t go into effect until the third year of the plan’s implementation.

The portal shows that those in the Omaha Public Schools district would see about a 38% drop, while a 60-acre farm in Bennington showed a 41% drop. A home in the middle of Harrison, in the farthest northwest corner of the state, would theoretically see a 26% property tax reduction. Meanwhile, the headquarters of Pillen Family Farms in Columbus would fall 48%, according to the data portal.

6 News was told that reductions would get higher in the third year.

The governor released a proposal booklet, paid for by Pillen For Nebraska, on his website on Thursday, that takes aim at “special interest” tax breaks.

“Our state currently exempts nearly $7 billion from sales tax collections,” one of the booklet pages states. “Some of these exempts make sense, like exemptions for food and medicine. But many of the others are only on the books due to a paid lobbyist who got the exemption passed when Nebraska had the money.”

Read the governor’s property tax playbook

The governor said his plan isn’t extraordinary — it’s simply correcting a problem.

“No, it’s not bold. It’s just fixing the solution,” he said.

“It puts a curb on local spending,” Linehan said. “Local spending is the crux of the problem. As you know, the State of Nebraska doesn’t collect property taxes.”

Omaha Mayor Jean Stothert said in a statement Thursday afternoon that she supports property tax reform — and plans to unroll her latest round of reductions for city property owners soon — but called out the lack of details coming from the governor and Elkhorn Sen. Lou Ann Linehan, one of the state senators who has sponsored the bills.

“I certainly support property tax reform, however, I am concerned about the lack of thought, analysis or discussion with local governments as these potentially damaging plans and the unintended consequences are being considered,” she said in her release.

She also said Pillen’s tax plans would be detrimental to city services.

John Gage, director of the Nebraska chapter of Americans for Prosperity, said in a statement that Pillen’s plan has “massive costs” and would implement “the largest tax increase in state history.”

“While other Republican governors are working to make life more affordable for their constituents facing sky-high living costs under the Biden economy, Governor Pillen is pushing a plan that would be the largest tax increase in state history. AFP-NE will continue educating voters about the massive costs of this tax scheme and make sure the lawmakers who support it are held accountable.”

Watch Thursday’s news conference

EDUCATION FUNDING

Seeking to avoid the pitfalls fo the tax plan that went before the Legislature earlier this year, the governor this time has wrapped the idea around schools, the largest line-item on Nebraska property tax bills.

“It’s time the state quits quitting on kids,” he said in Thursday’s news conference. “It was astonishing to me when I learned that out of 244 school districts, the state of Nebraska provided no funding to 180 of them. Zero.”

All schools’ funding is in place for the upcoming school year, he said, with a plan to start conversations in the Legislature in January about the 2025-26 school year with a target of 3% annual growth — a number Pillen said he’s committed to keeping in place.

“Just remember: More money and more people don’t solve all the problems. What we have to do is we have to come together and make sure that we don’t keep asking for more measurables to hire more people to keep track of stuff. Let’s focus on educating our kids,” Pillen said Thursday.

Solving that problem will enable teachers to be paid more and students to receive a better education, he said.

“Who can be against solving our problems so we can pay teachers more and have great outcomes for our kids? That’s what this plan does,” he said. “Let’s clean the closets out. We don’t need to have so much administratve bloat in school systems and we can pay teachers more. That’s where the money come from,” the governor said.

Same for community colleges, he said. “Same model. Same backstops.”

BEYOND NEBRASKA SCHOOLS

Opponents say the plan gets messier when stepping beyond Nebraska schools.

The plan still involves raising taxes on cigarettes, vaping, and alcohol.

Pillen said that policies need be set up so communities that need more money than the state can provide get it instead through a bond issue approved by voters.

He also said that his plan will help renters, too, and dismissed critics, saying they clearly don’t have assets they rent out.

“If you’re going to not share — if anybody’s been in that business — do you want to have a good renter or a bad renter? If you have somebody that doesn’t take care of your place, you can charge enough for rent,” he said. “The market will correct, and renters will win by property tax reform. Not a shadow of a doubt. That’s the free market. That’s how it works. Those of you that say that doesn’t happen, well the one thing we can agree: what we’re doing now, rent will keep going up. ... This plan will solve the problem. Not a shadow of a doubt.”

SPECIAL SESSION OUTLOOK

Pillen did not have any details about when he would formally call the special session — which isn’t currently on the official legislative calendar — or how narrow the focus of the proclamation, but he said it will begin next Thursday, July 25, and would likely revolve around bills introduced by the appropriations and revenue committees.

“We’re gonna have bi-partisan support that’s gonna exceed 33 votes for this session. It’s not ifs ands or buts about it,” he said.

Pillen said that all 120 exemptions are on the table. The only untouchables are groceries and medicine.

Asked whether this is dead in the water because of opposition, the governor said: “Listen to what they say; watch what they do.”

“I have full confidence in all the 49 members of the Legislature to be able to critically think, ask questions, work through compromise. You know, nobody’s genuflecting at the altar. Are you kidding me? We’re Nebraskans,” he said.

But Gage said in his statement that he expected the tax plan to fail as it did during the spring legislative session: “Governor Pillen’s scheme to shift more taxes onto working and middle class Nebraska families was defeated once, and this special session will be no different.”

A group of senators is planning to hold “listening sessions” on Monday and Tuesday ahead of the special session. The community meetings will be held in Omaha and Lincoln, which weren’t stops on the governor’s tax plan tour across the state this summer. He did hold his first “town hall” in Bellevue, which he announced two days prior.

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