Nebraska Lawmakers Introduce Over 100 Proposals to Address Rising Property Taxes in Special Session

Nebraska’s special legislative session sees over 100 proposals aimed at property tax relief, including expanded sales tax and legalized marijuana. Discover key proposals and what to expect.

Bollywood Fever: Nebraska lawmakers have introduced more than 100 proposals aimed at easing residents’ soaring property tax bills, from a vast expansion of goods and services subject to the state’s sales tax base to legalizing marijuana to reap new tax revenue.

Why is the Nebraska Legislature in a Special Session? 

Gov. Jim Pillen recalled state lawmakers to the State Capitol on July 25 after the Legislature failed to pass a property tax relief bill before the regular session ended on April 18. Soaring housing and land prices have led to ballooning property tax bills for homeowners and farmers, with residential property assessed at nearly 100% of fair market value, compared to 75% for agricultural land.

Property taxes fund local services such as public education, police, and fire protection. Historically, state leaders avoided property tax relief, viewing it as a local issue. However, Pillen and others argue that high tax bills are preventing new homeownership and forcing elderly residents on fixed incomes out of their homes, necessitating state intervention.

What Will Be Addressed in the Special Session? 

More than 80 bills and 24 constitutional amendments were proposed in the first three days of the special session before bill introductions were closed. Public hearings began Monday and will be held for each proposal. Gov. Pillen’s proclamation convening the special session was intended to limit the scope of bills, but Sen. Danielle Conrad noted its complexity might allow for a broader range of ideas.

Which Proposals are Being Most Closely Watched? 

The bill receiving the most attention is LB1, introduced at Pillen’s request. The public hearing on Monday lasted over 10 hours, with the majority, including city, school, and business leaders, opposing it.

During the regular session, Pillen called for a 40% reduction in property taxes, initially backing a proposal to raise the state’s sales tax by 1 cent and expand the sales tax base. However, liberals criticized the proposal for shifting the tax burden onto those least able to afford it, while conservatives called for more spending reductions instead of new taxes.

In the special session, Pillen proposed an even more ambitious plan to cut property taxes by half. His new plan would apply the state’s 5.5% sales tax to more than 100 goods and services currently exempt and include taxes on candy, soda, cigarettes, vaping, liquor, CBD products, and some forms of gambling. Most groceries and medicine would remain exempt. The generated revenue would be used to issue tax credits to public schools to replace property taxes, with a hard cap on local property tax collections.

Are Other Bills Getting Traction? 

A bill by Sen. John Cavanaugh would offer a universal homestead exemption, exempting the first $100,000 of home value from property tax, estimated to cut $1 billion from property tax rolls.

Other proposals, though unlikely to advance in the conservative Nebraska Legislature, have gained notice. Omaha Sen. Terrell McKinney proposed legalizing marijuana and using the tax revenue for property tax cuts, public education, and community development. Sen. Tom Brandt suggested expanding sports betting to include college teams for additional revenue. Sen. Jen Day proposed selling a state-owned plane used by the governor’s office.

The special session will continue to evaluate these and other proposals in the coming weeks, aiming to find solutions to the state’s property tax challenges.

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