Major Property Tax Reform Under Threat In One State

A bill that would significantly reduce property taxes in Nebraska is facing stiff opposition as it faces the last hurdle of the legislative process.

Earlier this year, state Governor Jim Pillen called for a 40 percent reduction in property taxes, with Legislative Bill 388 being introduced to the Nebraska legislature on January 12. On Wednesday evening, the bill passed 28-14 after a debate concerning which taxes should be raised in order to reduce state property taxes.

Nebraska has one of the highest average property taxes in the U.S. The average effective property tax rate in Nebraska is 1.61 percent according to SmartAsset, placing it in the top 10 highest states nationwide. In Nebraska’s largest counties’ rates, however, can sometimes exceed 2 percent.

The wider bill makes various changes relating to revenue and taxation on various goods, including cigarettes, soda, hemp products, lottery tickets and more in order to pay for the property tax decrease.

Pillen initially pushed a 2-cent increase in the state sales tax rate, as well as taxes on several goods and services, to help the bill reach its 40 percent reduction goal. Nebraska’s revenue committee has now advanced LB 388 with a reduced 1-cent sales tax hike and a shorter list of goods and services subject to it. It came after the suggested increase in sales tax was heavily lobbied against by business groups, anti-tax advocacy groups, and think tanks.

Now, the amendments to the bill mean Nebraska’s property tax would be reduced by 22 percent if enacted in its current form, according to a report by the Nebraska Examiner. The bill has now advanced to its final reading, and voting on the bill will take place on Thursday, April 18—the last day of Nebraska’s legislative session.

But the bill stands to be delayed until a special session in the summer as Pillen remains determined to reach the 40 percent property tax cut. Newsweek has contacted Pillen via email for comment.

Speaker of the Legislature John Arch has said the issue comes down to a “struggle” in “identifying the source of the revenue” that would allow the property tax relief to get off the ground.

“Governor Jim Pillen is very, very committed to getting to 40 percent,” Senator Lou Ann Linehan, who has worked with the governor on the tax plan and is its main sponsor on the revenue committee, told York News-Times.

Senator Danielle Conrad, who has opposed LB 388, said lawmakers should wait until the summer to create “a more thoughtful approach than rushing forward at this late stage,” according to the Nebraska Examiner.

Pillen seems unlikely to back down on reaching the 40 percent reduction, saying that bringing down property taxes is one of his top priorities. “In 2023, state property taxes exceeded $5 billion. In the last six years alone, property tax collections skyrocketed $1.3 billion. We need transformational property tax reform to get us down to around $3 billion annually,” he said in January.

“Property taxes are so out of whack, you don’t even need to own property to be adversely affected,” a press release issued by Pillen continues. “We need to do this for the countless Nebraskans who have worked, raised a family, and educated their kids here, by giving them the opportunity to retire in Nebraska. Our current property tax structure is taxing lifelong Nebraskans out of their homes—it is unacceptable.”