Nebraska special session: Gov. Pillen signs tax reform bill

LINCOLN, Neb. (WOWT) - Gov. Jim Pillen signed the tax reform bill the Legislature sent him on Tuesday, granting some property tax relief to Nebraskans.

It wasn’t the 50% reduction he first talked about when calling lawmakers back to Lincoln this summer.

“3% is definitely not what we came here to do,” Bayard Sen. Steve Erdman said. “...It’s very unusual we that we put in 17 days and accomplish so little.”

The Legislature adjourned the special session on a 29-15 vote just ahead of the governor’s news conference at 2:30 p.m. The special session seems to have taken a toll on lawmakers.

“I think we’re tired, we’re crabby, some of are sick — I mean, we’re working nights and weekends. This is crazy, this is crazy,” said State Sen. Mike Moser of Columbus.

SPENDING CAPS

One of the main pillars of the tax reduction plan has been cutting the spending of cities and counties in the state. That’s been a tough discussison for lawmakers.

Lawmakers did again debate the bill ahead of the vote, with some not having a clear cut understanding of how much relief LB34e would actually bring. But supporters of the bill said that something was better than nothing — and that the key success was the cap put on counties and cities.

“If you want to reduce tax-taking, reduce spending,” Elkhorn Sen. Brad von Gillern said. “The lids apply to the local taxing authorities and will reduce tax-taking. That is significant — we are not doing nothing here today.”

Elkhorn Sen. Lou Ann Linehan, who also chaired the Revenue Committee, echoed that sentiment at the governor’s news conference Tuesday afternoon.

“That might not sound like a lot, but that’s a month’s groceries, two months of groceries — it’s a big deal,” she said.

Omaha Mayor Jean Stothert said Tuesday that the city is not against property tax reduction, but said Omaha is not the problem.

“Since I’ve been mayor, we’ve lowered the levy 11%,” she said. “Well, somebody says, ‘That doesn’t matter.’ Well, yes it does matter because if we didn’t, your taxes — this is City of Omaha — would be 11% more.”

And as proponents touted the progress made on spending caps, Stothert said she was concerned about how a hard cap could hurt city growth and cause other problems.

“A 0% hard cap — we’re very concerned with our bond rating, because the bond raters want to know you have the ability to adjust through deflation, inflation, and hard times,” she said.

GOVERNOR’S REMARKS

Pillen claims the single-digit property tax reduction will grow because of the tax savings provided by property tax credits that are already on the books — but that many Nebraskans don’t take advantage of.

“Making sure that 45% of Nebraskans that can’t afford to hire an accountant, can’t afford to do this or that, that they are getting a 20% property tax cut,” he said.

Pillen expressed his satisfaction with a 20% decrease in property taxes — nowhere near the 50% he first talked about when calling lawmakers back for the special session — but said during the news conference that he wasn’t quite ready to celebrate.

“I don’t think we should slap our backs too much. The people in Nebraska will be the judge if we did a good job with this special session,” he said during the news conference. “...We have a lot of work to do. We’re just getting started.”

He said the real problem has been spending, and that the Legislature has fixed that.

The governor was asked “what went wrong” with the session, he put a lot of the blame on “special interests.”

“The power of people deciding to go separate ways and not working together, what special insterests and associations did for their interests instead of the interests of Nebraskans, put lots and lots of pressure on certain people. I mean, this game is not rocket science. It’s 33-17; it only takes a couple to get cracked,” Pillen said.

He placed a lot of blame on “special interests” — “So the stunning power of the lobbying groups,” he said — for the state’s growth problems.

Yet earlier this month, the governor said at his “One Nebraska” ag and economic development summit, which this year focused on retaining graduates and attracting new residents, that the state has “competitive advantages.”

“We have unique strengths as a state that we can brag about to bring in business,” Pillen said. “Nebraska has amazing people, abundant natural resources, and the most sustainable ag production on the planet.”

But on Tuesday, Pillen said there’s a lot of learning to do, hinting at another go at the issue next year.

“We’ll watch a lot of game film, and we’ll come back stronger next year,” he said. “...We will become stronger together; we will fully recognize what a crisis we have, and how we to have to follow what economists say. We have to change property tax being the highest in the state and get that fixed because our state is in dire jeopardy of losing the ability to grow, and that can’t happen — that can’t happen on any of our watches.”

The governor had to walk back his previous comments, where he promised to call senators back into session as long as it takes to get his plan in place. On Tuesday, he said he wouldn’t be calling senators back on the issue this year.

“I think that I understand the math, and I understand the power of who’s drawing the lines in the sand. That’s crystal clear,” he said. “I think to call another session on property tax right now before the end of the year, before Christmas, would be a mistake and I don’t plan on doing that.”

He said that more Nebraska “stakeholders” — not associations or representatives — need to be involved in the process to circumvent “all the silly things that go on out in that rotunda.”

Pillen said the cut will help Nebraska recruit residents and develop the workforce, but admitted he doesn’t have data about “how many people just turned the lights out when they think about Nebraska because of what our property tax is, what it shows up on the website.”

Before getting into his own comments on LB34e, the governor brought Linehan up to make remarks. As chairwoman of the Revenue Committee, she has been the driving force behind the push for the governor’s plan.

“It’s been a hard tough road. It always is. Every time we try to address property taxes, it’s been a battle,” she said.

THE VOTES

LB34e made it through cloture Tuesday morning on a 39-6 vote then passed 40-3, with Erdman, Steve Halloran of Hastings, and Justin Wayne voting “no.” State Sens. John Cavanaugh and Machaela Cavanaugh, both of Omaha, and George Dungan of Lincoln were present but not voting.

Senators also passed LB2e and LB3e, which will help cover the funds that won’t be coming in when LB34e kicks in.

LB2e passed 33-11, with State Sens. Lynne Walz of Fremont and Anna Wishart of Lincoln present but not voting; and State Sens. Eliot Bostar of Lincoln, J. Cavanaugh, M. Cavanaugh, Danielle Conrad of Lincoln, Wendy DeBoer of Bennington, Dungan, Erdman, as well as Omaha Sens. John Frederickson, Megan Hunt, Tony Vargas, and Wayne all voting “no.”

LB3e passed 36-9, with Walz again not voting; and J. Cavanaugh, M. Cavanaugh, Conrad, Dungan, Erdman, Frederickson, Halloran, Hunt, and Wayne voting “no.”

Bellevue Sens. Carol Blood, Terrell McKinney, and Jane Raybould were excused and not voting on all three items.

Last week, Gov. Jim Pillen vowed to veto any version of the tax reform bill that “watered-down” the caps orginally presented in the original bill.

The Unicameral worked on the bill for several days since first convening for the special session on July 25. Pillen called senators back this summer after the property tax relief package failed in the Legislature during the spring session.

The counter on the Americans For Prosperity website hit $370,781 as lawmakers adjourned on Tuesday. But the Open Sky Policy Institute estimated the special session cost Nebraska taxpayers nearly $500,000, based on estimates from the Legislative Fiscal Office.

REACTION

“We are deeply disappointed with the outcome of the Special Session regarding tax reform. The Republican Platform has always been to implement meaningful changes that provide real financial relief to all Nebraskans. While this session did not achieve the reform we were striving for, our commitment to this cause remains unwavering.

We will continue to engage with Senators to advocate for tax policies that better serve our community. It is crucial that we find solutions that offer tangible benefits and address the needs of Nebraska citizens. We are dedicated to working to achieve the tax reform that Nebraskans deserve.”

“The final results of this special session are a testament to the power of public engagement in the legislative process. Testifiers showed up in droves to attend hearings, often waiting hours to tell their story and advocate for their small businesses, families and schools... We are proud Nebraskans today, and look forward to continuing this important work.”

Watch the governor’s news conference

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Digital Producer Jackson Piercy contributed to this report.

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