For Release Week of August 5, 2024


All Things Nebraska
Paul Hammel, retired senior reporter for Nebraska Examiner
Summertime, and the living isnÕt so easy at the State Capitol

      Summer is usually a relaxing time in Lincoln.Ê
      College students have left, state lawmakers have gone home, the weather gets hot, the backyard tomatoes get ripe, and the biggest debate around town is whether this is the year the Huskers become relevant again in football.
      Optimism always abounds in the pre-season, before the first kickoff.
      But not sure the same optimism accompanies the special session Gov. Jim Pillen has convened to address the stateÕs traditionally high property taxes.
      Every year, state senators tackle a variety of ideas to cut property taxes, and every year they chip away at the problem Ð a new tax refund here, a bigger tax credit there.
      ThereÕs been incremental changes in recent years. About $1 billion in reductions have been accomplished by shifting community colleges off the property tax rolls, and increasing the tax credits we get from what we pay to support local schools.
	(The most recent tax bill we paid on a small farm in northeast Nebraska, for instance, actually went down slightly, though some senators complain whatÕs been done has only slowed the increase in property taxes in their districts.)
      The reason thereÕs been only incremental changes in property taxes is that itÕs really hard to enact sweeping changes, like Pillen is proposing.
	He wants to shift the load off of local property taxes and onto state sales and income taxes. And when youÕre shifting the load from one group of taxpayers to another, that gets a squadron of special interests and lobbyists all stirred up.
      ÒDonÕt tax me, tax that man behind the treeÓ is the old saying, and already organizations representing the stateÕs farmers and business groups have objected to portions of PillenÕs tax plan, which calls for imposing a new 2-cent sales tax on ag and business equipment.Ê
      That new tax, they argue, would hurt farmers and companies.
      Of course, anyone facing a new or increased tax can raise similar arguments.


      For instance, raising taxes on vaping and smoking hurts low-income people, some argue, because they are the predominant customers for those products. Raising taxes on candy and pop will force people to buy those things in another state and will be a burden on retailers to discern what qualifies as ÒcandyÓ and what doesnÕt. Requiring auto repair shops and home remodelers to collect sales tax will force more under-the-table transactions, to avoid the tax.
      ThereÕs also pushback to PillenÕs plan because it would be a huge erosion in local control of K-12 education, shifting decisions to Lincoln and away from the local school board.
      You gotta give Pillen credit for proposing a plan. But what heÕs seeking is a big gulp, not a small, incremental improvement, like those that have won passage in recent years.
	ThereÕs some good, smaller-scale changes that have been proposed during the special session so far.
      For instance, why doesnÕt Nebraska legalize online sports betting and get some tax revenue from that? The expected haul would be $100 million a year, which isnÕt insignificant.Ê
      Why not increase the tax on cigarettes? ItÕs a bad habit that is bad for your health, and Nebraska hasnÕt increased taxes on cigarettes for 21 years. A tax increase might force some people to quit smoking and others to not pick up the habit, which are both good things.
      Pillen argued, in a recent column, that Nebraska faces a ÒcrisisÓ in property taxes. They are Òout of whack,Ó he says. ItÕs forcing people out of their homes, he claims, and makes young people move out of state.
      We all gripe about property taxes, but IÕd like to see some proof of those claims. Most studies indicate that young people move out of state for better jobs and to live in places with amenities they canÕt get in Nebraska, such as pro sports, ski resorts, Broadway shows and sandy beaches.Ê
      And the state offers a pretty generous property tax break, via the homestead tax exemption program, for low-income folks, and veterans and handicapped homeowners who qualify. It helps keep people in their home. If it isnÕt working well enough, it should be expanded.
      This all suggests that thereÕs plenty of tweaks to the stateÕs tax system that would reduce property taxes Ð tweaks that historically have been easier to pass than huge changes like Pillen is proposing.
Ê
      Our governor has maintained that he won't settle for something less. But past history suggests he should be ready to settle for more modest changes.
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Paul Hammel has covered the Nebraska state government and the state for decades. He retired in April as senior contributor with the Nebraska Examiner. He was previously with the Omaha World-Herald, Lincoln Journal Star and Omaha Sun. ÊA native of Ralston, Nebraska, he loves traveling and writing about the state.