On Tuesday, the Nebraska State Legislature approved a heavily scaled-down proposal to reduce property taxes.
It was the first day of debate on the latest version of the property tax bill, and Senator Brad von Gillern had words of praise for the man responsible for calling the senators into a special session – Governor Jim Pillen.
“God bless him,” von Gillern said. “He put everything on the table for us to choose from, and he took arrows and spears to do it, and I appreciate his leadership in doing that. He did that and then left it up to the legislature to do what we’re supposed to do here, which is to pass a bill that’s good for the people of Nebraska.”
Senator Carol Blood was not so flattering towards Pillen, who helped her win the gubernatorial election two years ago.
“Everyone says, ‘It’s great. He gave us this huge plate of stuff to choose from and we were allowed to downgrade it.’ Well, another way of looking at it is that he threw mud at the wall and whatever stuck to it, and that’s what we’re left with,” Blood said.
As debate began Tuesday, senators considered a proposal to impose sales tax on about 70 currently sales-tax-exempt goods and services, from soda and candy to pet care and lawn care. The idea was to use the money to get the state to cover a larger share of school costs, which are currently funded by local property taxes.
Senator Wendy DeBoer opposed the bill and criticized the list of items to be taxed.
“It’s the love tax, because it taxes dating services. The puppy tax – nail clipping and grooming,” she said. “The tax on weight-loss programs, the tax on everything you bought on Amazon last year, the tax on sober rides home from the bar, the tax on dry cleaning and other laundry services, whatever that means.”
Senator Tom Brandt supported the proposal, saying the compromises it contained were worth it.
“Asking us to pay five cents more for a can of soda to help fund our schools while helping people stay in their homes seems more than reasonable,” Brandt said.
Further information from the special session of Parliament:
Parliament prepares important vote on property tax for Tuesday
Senators continue to discuss taxes
Special session debate: Should there be a special session at all?
Parliament considers budget cuts in special session
Slimmed down version of property tax cuts proposed
Marijuana, municipal aid for property tax relief proposed
Education Committee considers changes to school funding
Senator Terrell McKinney said a property tax cut would not help people who rent.
“Landlords are going to continue to raise rents,” McKinney said. “There’s going to be no relief for tenants. And when I think about my district, 60% of rents in my district.”
But Senator Rick Holdcroft said if lawmakers do not act, renters will also be affected.
“If we don’t do something, property taxes are going to go up significantly,” Holdcroft said. “If we don’t do something, your rent is going to go up significantly if you’re a renter.”
Other senators, including Senator Rob Dover, opposed the attempt to push through such major changes in a short special session.
“Why are we having this special session? We’re going to make the biggest change in tax policy in over half a century, and we’re going to do it in a matter of days,” Dover said. “That concerns me.”
After a morning of back and forth, Senator Lou Ann Linehan, chair of the Finance Committee and a driving force behind Pillen’s property tax cut, acknowledged that she did not have the votes needed to break opposition to the proposal.
Instead, Linehan introduced an amendment that would simply expand and restructure an existing property tax credit.
Currently, people have to pay their property taxes and then are entitled to some of their money in the form of a credit when they file their income tax return. But Linehan says about 45% of taxpayers – mostly low-income people who don’t use professional tax preparers – don’t use the credit.
The change would reduce their tax burden but would not affect the property tax reduction for those who already claim the tax exemption.
Senator Mike Moser supported the change but called the development disappointing and anticlimactic.
“This change improves the property tax situation a little bit,” Moser said. “It’s not the magic bullet that some of us were hoping for, but I think at this point it’s the best we’re going to get.”
Senator George Dungan opposed the change, saying the process had caused confusion and uncertainty about its impact, comparing it to a complicated legal case.
“I have a friend who is an attorney, and he’s a trial lawyer. One time he had a really complicated trial in front of a jury. He stood up to give his closing argument, and instead of making a witty comment or something he could tell them about the actual theory of the case, he stared at the jury for a few seconds and said, ‘This is a mess. This is a mess.’ And that’s how I feel right now,” Dungan said. “The entire trial just felt like a mess.”
Disappointing mess or not, senators voted 34-11 to end debate and then 36-8 to pass the tax bill. Senator Rob Clements, chairman of the Budget Committee, estimated that it would increase the cost of the loan program by about $185 million. He said about $140 million of that could come from budget cuts proposed by his committee, with the rest coming from the state’s reserves. Clements said those budget cuts would be debated Wednesday. Pillen, for his part, issued a statement calling the bill as tabled a step in the right direction, but saying there was still a lot of work to be done.