Nebraska Gov. Jim Pillen called a special legislative session, starting on July 25, to try to win lawmakers’ support for his property tax reform plan.
The plan involves funding Nebraska’s K-12 schools through sales taxes — eliminating certain sales tax exemptions and raising taxes on advertising, cigarettes, vaping products and alcohol — rather than through property taxes, according to comments by Pillen in his monthly radio call-in show, the Nebraska Examiner reported.
Pillen’s property tax reform push bears some similarities to property tax relief efforts in Texas and in Colorado that succeeded. But Pillen’s previous attempt, a bill known as LB388, failed in the state Senate in April.
Nebraska Gov. Jim Pillen has called a special legislative session to try to pass his property tax reform plan.
Governor.nebraska.gov
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A spokesperson for Pillen did not respond to requests for comment. The sponsor of LB388, state Sen. Lou Ann Linehan, did not respond to a request for comment.
The bill would allow municipalities to increase property tax requests above the maximum by the amount budgeted for bond debt service.
It would also exclude from its definition of “school district taxes” any property taxes levied for bonds.
For cities and counties, bonds were outside of the cap that was negotiated, according to Lynn Rex, executive director of the League of Nebraska Municipalities.
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Still, the legislation, which included the Property Tax Growth Limitation Act, the Property Tax Relief Act and the Advertising Services Tax Act, drew an onslaught of lobbying by a wide range of groups.
LB388 would have levied a 20% tax on vaping products, a $1 per pack tax on cigarettes and a 25% tax on CBD and hemp products. It would levy a 7.5% tax on firms doing business in Nebraska whose combined gross advertising revenue exceeds $1 billion. It also would tax lottery tickets, storage services, dry cleaning and veterinary services for household pets.
According to lobbying disclosures, groups in favor of the bill include the Nebraska Association of County Officials, the League of Nebraska Municipalities, the American Cancer Society and Nebraska Cattlemen.
Lobbying against it were the Nebraska Vape Vendors Association; the Cannabis Factory; Phillip Morris; Meta; Google; TechNet, a trade group representing technology CEOs and senior executives; Americans for Prosperity, a conservative advocacy group linked to the Koch brothers; the Association of National Advertisers; Walmart; and the Lincoln and Greater Omaha chambers of commerce.
Also opposed was the Nebraska State Education Association, a public school teachers’ union, which did not respond to a request for comment.
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“There was an incredibly misleading campaign at the last minute against LB388 from the Nebraska Grocery Industry Association,” said Rex. “They led the effort against it … Senator after senator was getting pummeled with emails. They said, ‘This is going to tax food.’ … It would have added a sales tax on pop and candy. I don’t know of anything more flagrant in terms of an effort of misrepresentation against a bill.”
Ansley Fellers, executive director of the Nebraska Grocery Industry Association, said the group’s main concerns were the “increased cost of doing business” and that the bill was not a net tax reduction.
“One, soda and candy are food, they’re edible products,” she said. “[The bill] will hit lower-income individuals hardest. It’s also hard to justify taxing any food product right now given the kind of inflation we’re seeing.”
Fellers added, the way the bill was written would have taxed granola bars but not licorice, kettle corn but not Kit Kats.
“The governor has said that he’s looking more at the state taking over funding for public schools,” she said. “That’s an expensive proposition. … That would be a several-billion-dollar shift [onto sales taxes].”
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According to Rex, exemptions added over recent decades have chipped away at sales tax revenues and property tax revenues in Nebraska. All were “legitimate exemptions at the time for Nebraskans to compete with other states,” she said, but there was a problem: other states’ legislatures then put together reimbursements for local governments through state aid programs as they narrowed the tax base through exemptions. In Nebraska, it all got shifted over to property taxes.
In March 2011, “they got rid of the one and only reimbursement to municipalities” in Nebraska, Rex said. She added, Nebraska voters have been confused by rhetoric about rising valuations. The problem, she said, isn’t increased valuations — “that’s the basis on which we get loans,” she noted — but consistently rising property taxes.
From fiscal 2022 to 2023, the total valuation in Nebraska increased by 11.44%, and the taxes levied during that period rose by 5.7%.
“It is critically important that the state legislature … try to address the incremental shifts over to property taxpayers that have happened over the last four decades,” Rex said. “It’s so important to make sure that local governments have the revenue that they need to do their jobs. … Just because your valuation goes up, doesn’t mean your taxes have to go up.”
The governor and his team are working with state senators to come up with a package that can pass the legislature during the special session, she said.
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LB388 would have changed the current lid on restricted funds for municipalities and counties to 3% or the change in the consumer price index, whichever is greater: “That is a lid on basically all sources of revenue for municipalities and other political subdivisions except schools,” Rex said.
The schools are not under the current 2.5% lid on restricted funds. They have always had a different lid.
“Municipalities, counties, everybody else — we’re just hanging in the wind,” Rex said.
Former USC cornerback Ceyair Wright has signed with the Nebraska Cornhuskers. It’s a Big Ten college football transfer, something we wouldn’t have been able to say at this time one year ago.
Wright, who entered the transfer portal on April 25 after three seasons at USC, announced his commitment to Nebraska on Friday afternoon following an official visit to Lincoln earlier in the week. He has two seasons of eligibility remaining.
In 2021, Wright was rated as the No. 78 overall prospect in the country and No. 7 corner, from 247 Sports. Nebraska was among his finalists at the time, though he committed to USC before visiting Lincoln.
The 6-foot, 180-pound Wright played in 23 career games during his time with the Trojans. The 2022 season was his most productive, as he played in all 14 games with 11 starts. He recorded 28 tackles, one interception and two pass breakups that season.
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The former top-100 prospect and four-star recruit in the 2021 class has previously been an actor, appearing in several movies, TV shows and commercials. He played a fictional son of LeBron James in “Space Jam 2”in 2021. He also appeared on the ABC comedy “Grown-ish.”
During his senior year at Loyola High School, he was the focus of a “Dual Threat” documentary produced by Overtime.
BREAKING: Former USC CB Ceyair Wright has Committed to Nebraska, he tells @on3sports
The 6’1 185 CB will have 2 years of eligibility remaining
Wright, who is also an actor, played one of LeBron James’ sons in Space Jam 2https://t.co/jhWrilQEZg pic.twitter.com/LUNe2nuTVl
COLUMBUS, Nebraska — The funding route for Gov. Jim Pillen’s property tax reforms ideas will likely continue to focus on sales and “sin” taxes, and he says that “income tax won’t be touched.”
At various town halls around the state, Pillen has asserted that his solution to reducing property taxes lies in a broad sales tax base, which critics have said could raise taxes on poorer Nebraskans. Unlike in the spring, the governor has focused more recently on eliminating certain sales tax exemptions and increasing sin taxes. But he is no longer talking about raising the sales tax rate from 5.5 cents per dollar.
“We have to be competitive [with] income tax, and then we have to get competitive property tax,” Pillen told reporters Wednesday.
‘Keep that massive win’
Last year, lawmakers approved a long-sought reduction in the state’s income tax rates that will lower the top rates to 3.99% by 2027.
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Pillen is now pushing ahead with his stated goal that by the end of 2024 — his second year as governor — the state will have eliminated or shifted a total of 40% of the state’s tax burden away from property taxes. That’s about $2 billion, with about half still to go to meet Pillen’s goal.
In an in-house podcast this week, Jim Vokal, CEO of the Omaha-based think tank Platte Institute, joined senior policy adviser Michael Lucci for the Platte Institute in calling to guard the income tax changes — which Lucci called “the best tax reform of any state in 2023.”
The Platte Institute duo said the state should follow through with that plan unless “some extreme event” comes up that can’t be foreseen.
“Keep that massive win,” Lucci said. “Lock that down and then let’s all work together going forward to figure out what to do on the property tax.”
Future local, state spending
The podcast came in conjunction with the Platte Institute releasing its own property tax reform report, which offers some recommendations that echo those of Pillen.
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One calls for hard caps on local spending increases, which Vokal told the Nebraska Examiner will “stop the bleeding” associated with annual property valuation increases. Jim Vokal, CEO of the Platte Institute (Courtesy of the Platte Institute)
Valuations rose $32 billion in 2023, the largest single-year increase in state history, while nearly $300 million more in property taxes were collected across the state. In most cases, when valuations go up, more taxes are collected unless local tax rates go down.
Lucci said that elected officials should have to vote any time property tax rates could go up by $1 or more and that they should ask for a vote of the people for larger tax increases over a “hard cap,” such as an increase higher than the rate of inflation.
“That is the ultimate form of local control,” Lucci said on the podcast. “Soft cap for the first dollar raise, hard cap for dollars raised on whatever threshold folks think is reasonable.”
‘Full range of arrows in the quiver’
But Pillen’s desire to look only at sales taxes for his solution to an identified crisis could make his efforts more difficult, according to Rebecca Firestone, executive director of the OpenSky Policy Institute.
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She said the reduced revenues resulting from the income tax cuts would be a “major complication” for a governor who wants to solve an identified crisis but not “look at the full range of arrows in the quiver of state tax policy.”
Firestone said the most recent estimates she’s seen from the phased down income tax rates will lead to about $1 billion in reduced state revenue in 2027.
If paused, it could mean about $600 million for Pillen to work with for his ideas, which include the state taking over K-12 school funding.
“They made a lot of spending commitments in 2023,” Firestone said of lawmakers, pointing to a new state prison, a $1 billion Education Future Fund and the Perkins County Canal. “If some of those spending commitments were put back on the table, it could potentially free up revenues.”
Firestone said “sin” taxes, such as those on cigarettes, vaping products and alcohol, have shown public health successes when taxes are increased. However, they aren’t the best for general sources of revenue that could be needed for Pillen’s ideas.
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Questions around school funding
Many future ramifications need to be considered for Pillen’s “bold plan” for the state to take over the property tax portion of K-12 funding, Vokal said. Among those questions is how to balance the loss of local control and engagement for the state’s 244 school districts.
“I’m not saying that we can’t get there or we shouldn’t go that direction or necessarily support components of it, but you got to figure out how you’re going to allocate the funding [and] if there’s going to be spending oversight,” PIllen said.
Vokal and Lucci joined Pillen in calling for a more level sales tax system between goods and services, but Vokal cautioned that business or agricultural inputs should be off the table.
He said Pillen’s suggestion to remove exemptions on certain inputs and tax them at a lower rate per purchase, such as at 2 cents per dollar, still complicates the policy.
“If you’re going to fund education, broadening the base is fine, and it’s prudent, but you’ve got to have a consistent tax code,” Vokal said.
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Firestone said school funding needs to include conversations about student achievement, too.
A different spending future
Rebecca Firestone, executive director of OpenSky Policy Institute. (Courtesy of OpenSky)
Firestone added it’s hard to analyze Pillen’s newest ideas without any formal proposals or ideas, “although we are at the ready and tracking this very closely,” but she said the latest tax measure that did not pass in the spring has some clues.
“We’re not seeing any proposals for revenue raisers that are substantially different in their nature at this point,” Firestone said, adding it’s hard to determine who would ultimately benefit.
Pillen told reporters Wednesday that taxpayers likely wouldn’t see impacts of his ideas until the start of 2025, as many budgets for the next fiscal year are already in progress.
Still, Vokal said local political subdivisions need to plan ahead.
“They’ve got to understand that we are looking to a different future,” Vokal said. “And that future is reining in spending, and it sounds like, potentially, the state taking over education and controlling that spending.”
Matt Rhule may have picked up the boost his defense needs.
Ceyair Wright committed to Nebraska Football Friday. The 6-foot, 180-pound cornerback played at USC before entering the transfer portal, having left the team near the end of the 2023 season. Wright has two seasons of eligibility remaining.
As a redshirt freshman in 2022, Wright started 11 of the team’s 14 games at corner. He recorded 28 tackles, adding an interception and a pair of pass breakups.
Wright’s addition is a welcome one to the Blackshirts. Tommi Hill is expected to lock down one side but on the other, question marks remain. Transfer Blye Hill was injured during the Red-White Spring Game and will miss a portion of the season. Jeremiah Charles, coming off of a redshirt season, lacks extended experience, though he is one of the most athletic players on the team.
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Oct 28, 2023; Lincoln, Nebraska, USA; Nebraska Cornhuskers defensive back Tommi Hill (31) intercepts a pass from Purdue Boilermakers quarterback Hudson Card (1) during the fourth quarter at Memorial Stadium. / Dylan Widger-USA TODAY Sports
In 2021, Wright was rated as the No. 78 overall prospect in the country and No. 7 corner, from 247 Sports. Nebraska was among his finalists at the time, though he committed to USC before visiting Lincoln.
Away from the field, Wright appeared 2021 movie Space Jam: A New Legacy as one of the son’s of NBA star LeBron James.
Wright is the eighth transfer for NU this cycle. He joins Vincent Genatone (Montana), Micah Mazzccua (Florida), Stefon Thompson (Syracuse), Dante Dowdell (Oregon), Isaiah Neyor (Texas), Jahmal Banks (Wake Forest), and Blye Hill (Saint Francis).
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