Pillen’s property tax road show targets possible yes votes

BELLEVUE — Nebraska Gov. Jim Pillen took his push for property tax relief on the road Friday, launching a series of town hall meetings aimed at finding the 30 to 33 legislative votes he needs for a promised special session this summer.

Pillen told about 50 people at Bellevue University he remains committed to a plan offsetting $2 billion of the $5 billion each year Nebraskans are spending on property taxes. He said he won’t stop pushing until state senators act.

He asked Nebraskans to let lawmakers know people can’t sustain property tax loads that increase in good times and bad. He said property owners could spend $6 billion a year on property taxes in three years, an amount that will have doubled in a decade. 

His goal is still to have lawmakers pass a proposal to pull forward, or “front-load,” about $750 million in already approved income tax credits for property taxes paid.

He touts another $248 million in property tax relief from having the state pick up the tab on community colleges to reach the first billion dollars in property tax relief. His troubles have come in getting lawmakers to agree on where to get the second billion.

Pillen still would like lawmakers to consider up to a 1-cent increase in the state sales tax, which would raise nearly a half-billion dollars. For the rest, he would like to see the state exempt fewer items from the sales tax or “broaden the base.” He made similar proposals leading into the spring legislative session. 

One Pillen target is increasing the cigarette tax, which he said is too low, and adding the sales tax to pop and candy, which he said should not qualify for an exemption as food.

Lawmakers balked on passing these proposals this spring, with some opponents calling them a “massive tax increase.” Pillen said Friday he won’t let noise from special interests protecting tax exemptions drown out homeowners and business owners.

He agreed with one woman who brought poster-sized color photos of her single-story home in Sarpy County and complained during the meeting about being unable to afford to repair her bathroom because she is paying $500 a month in property taxes.

“We have to win,” he said. “The only way we win is if Nebraskans are engaged and call their elected officials.”

Tour will stop in at least a half dozen cities

Pillen’s barnstorming tour will cover more than a half-dozen cities across Nebraska, he said. He and Lt. Gov. Joe Kelly will visit the districts of state senators he needs to vote for his plan. He started in Bellevue, home to State Sen. Rita Sanders.

Sanders, a former Bellevue mayor, was one of several GOP state senators who did not vote for the property tax proposal. She said she listened to city leaders in Bellevue who opposed it, and looked forward to addressing their concerns with the governor.

She said she is open to discussions on property tax relief, an issue that Pillen said most owners of homes, businesses, farms and ranches in Nebraska describe as their top issue.

“Overall, everyone wants their property tax reduced, but doesn’t understand how we get there,” Sanders said after the meeting, which she attended and sat in the front row. “So that was good. I’m proud that we’re the first stop along that path.”

To Pillen, whose family owns a massive hog operation based in Columbus, and to many of the people attending Friday’s meeting, high property taxes are a drain on an otherwise productive economy. But he said he’s not pursuing changes for personal gain.

He said he is focused on workforce development and said he hears too often from business leaders trying to hire workers from out-of-state who balk when they see the property taxes they would pay. He said it hits young and old homeowners hardest.

He said the state has made significant progress in recent years in getting more competitive with its neighbors on income taxes. Nebraska, he said, is No. 7 highest nationally in property taxes, and that’s not a Top 10 ranking the state wants. 

Some of the governor’s critics have argued that his push for higher sales taxes would push Nebraska’s sales tax ranking just as high, if not higher. But Pillen said other states that use sales taxes this way do fine, citing South Dakota as an example.

He said a 1-cent sales tax increase would also help the state address about an $80 million shortfall with the Department of Transportation because of higher inflationary costs in road construction. Under state law, about 12.5% of any sales tax increase goes to roads.

Critics question raising one tax to offset other

John Gage of Americans for Prosperity of Nebraska said the state struggles to compete on taxes because every level of government in Nebraska spends too much money. He pressed the governor to find solutions that do not increase one tax to lower another.

“Calling a special session simply to raise taxes will only make it harder for Nebraska taxpayers and businesses struggling to make ends meet,” Gage said.

But Pillen called that and similar criticisms of his proposals misguided, including from his predecessor as governor, U.S. Sen. Pete Ricketts. He said he knows state government will have to set caps on local spending to get relief to taxpayers.

His proposal would set a cap on local government at 3% or at the consumer price index to make it manageable. But some have questioned how effective those caps would be if they make exceptions for public safety costs and roads.

He said property taxes aren’t a problem Nebraska could grow its way out of. He also said he would be proposing cutting $350 million to $500 million from state government “by running it like a business,” though he offered no specifics.

In a moment of levity, Pillen said, “I kind of understand why no governors ever tackled it like this before.” 

The governor fielded questions from the crowd about how he would work to make sure the property tax relief was carried out and not spent at the local level. He said state senators could design caps that local governments would have to follow.

He faced questions about how long the state will have to wait to see promised property tax relief from approving casino gambling. He said the revenue stream was still a few years away but could produce about $100 million a year starting in fiscal year 2028.

Pillen would need 33 votes to pass property tax relief over a filibuster. Or he’d need 30 votes to change legislative rules and get around a filibuster. Although earlier this week his office mentioned having a special session in July, he offered no clear timeline Friday for when he would call a special session this year. He said only that it would happen this “summer.”

“We’re going to have it when we’re ready and when we’re going to win,” he said. “We’re going to get it done. … We’re going to have it in time so you can see it in your ‘24 tax bill.”