NEBRASKA LEGISLATURE

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Sen. Steve Halloran

Sen. Steve Halloran

District 33

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Three years ago, when I campaigned door-to-door to become your State Senator representing Legislative District 33, the most common issue I heard from concerned citizens was the need for property tax relief. Once elected as your State Senator, I believed that the Legislature could provide a long-term remedy for the current over-dependence upon property taxes. After three years in this office, it has become abundantly clear to me that neither the Legislature nor the Executive Branch will successfully provide substantive property tax relief for Nebraska’s taxpayers. This is not exclusively a criticism of the current Legislature or Executive Branch, but rather an observation of over three decades of both branches of office failing to act. For over three decades, candidates for the Legislature and the Governor’s office have campaigned promising property tax relief, but have failed to deliver. This is why I believe the people, also called the Second House, should be allowed to take action and vote for meaningful property tax relief through an initiative petition. Signatures are actively being gathered.

Is this the first time the public has taken to the initiative petition process to address taxation in Nebraska? The answer is no. Let’s look at the history of our state’s tax structure. Prior to 1966, not only was local government funded by property taxes, but the state government was also totally funded by property taxes. In 1965, taxpayers declared enough is enough and sufficient signatures were gathered to place a constitutional amendment on the ballot in the 1966 General Election to forbid the use of property taxes to fund state government. The initiative passed overwhelmingly. The day after the voters or the Second House passed this constitutional amendment, the state had no funding source….zero funding. The Legislature in conjunction with the Governor acted quickly to create income tax and sales tax to fund the state budget. The result was a more stable, broader-based tax structure of property tax, income tax, and sales tax. These three taxes frequently have been referred to as the “three-legged-stool.” The goal of this tax structure was to have all three taxes in relative balance, like a three-legged-stool. Initially, this three-legged-stool tax structure stayed relatively balanced. Over time, however, the tax load has shifted to property taxes carrying a disproportionate share of the tax load. The three-legged-stool is now dramatically out of balance.

Today, 53 years after the Second House approved a constitutional amendment disallowing the state from levying a property tax, Nebraska ranks as the 7th highest property tax state in the country. That is not a ranking Nebraskans can be proud of holding.

As Nebraska’s history has demonstrated, there comes a time for the Second House to speak. Thus, the current effort will place a constitutional amendment on the ballot for voters to have an option for substantive property tax relief.

Signatures are currently being gathered on an initiative petition for this purpose. If the required number of signatures are gathered, this initiative will be on the 2020 General Election ballot. The object of this initiative petition is….“Real property owners in Nebraska who have paid property taxes will receive a refund of 35% of said property tax in the form of a Nebraska State income tax credit; if the refund is more than income tax owed, then the taxpayer will be issued a check for the balance.”

It is important to note what this constitutional amendment will do, and what it won’t do, if it passes on the 2020 ballot.

First, this constitutional amendment will do the following. Passing this initiative petition on the ballot will pressure the Legislature and the Governor to step up and do what has been promised for over three decades, to “re-balance” Nebraska’s tax structure. The ultimate goal would be to create a tax structure with a broader base and a lower rate. The state should be duty bound to rebalance the three-legged-stool of taxes. Without the pressure of this initiative petition, state government has no compulsion to act.

Second, this constitutional amendment won’t do the following. It will not interfere with the collection of local property taxes, because this will be a refund from the state on your income taxes paid to the state. Local property taxes will continue to be levied, collected, and distributed as they are now. We need to fund local units of government…. schools, county government, municipalities, villages, Natural Resource Districts, etc. Local property taxes will continue to be the familiar source of funding for these essential local services.

As the Second House, your voices need to be heard. Enough is enough!

Sen. Steve Halloran

District 33
Room #1022
P.O. Box 94604
Lincoln, NE 68509
Phone: (402) 471-2712
Email: shalloran@leg.ne.gov
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