Before moving to legislative issues, I wanted to first mention that Julie and I took the time to attend the first annual Boots n’ Beef Music Festival at Pals Brewing Company south of North Platte last week. What a great event! It was a wonderful opportunity to listen to some great music and enjoy some outstanding refreshments. If you did not attend this year, look for the date next year. This is a can’t miss event!

Over the past several weeks, I have responded to several questions regarding a possible special session of the legislature later this summer. My answer continues to be: it depends on whether there’s something 33 Senators can agree on. It would be easy to wait until next year to move a plan forward since the elections will be over, the term-limited Senators will be done, and at least 15 new state Senators will join the body. Based on the primary election results, it is likely that there will be a similar number of conservative Senators in the legislature next year. However, Governor Pillen has no interest in putting off meaningful property tax relief.

The Governor is holding regular meetings to discuss options for property tax relief, which is clearly his highest priority. He has assembled a good cross-section of current state Senators who have committed to meeting on a near-weekly basis to craft a draft plan that the body can possibly support. The group is limited to current and one former state Senator, all of who have agreed to keep discussions private until a final plan can be worked out. However, I can share some background on the issues we are facing.

During this past session, LB388 was the Revenue Committee’s priority bill designed to create the funding mechanism to provide an additional property tax credit. Had the bill passed in its final form, it would have broadened the sales tax base and combined this new revenue with the current LB1107 income tax rebate to create a second property tax credit that would be credited against your local property taxes. Unfortunately, we could not reach a consensus on what items to add to and increase on the sales tax rolls and if “shifting” property tax to sales tax is a good tax policy. I feel strongly that if we do not add groceries, prescription drugs, essential goods, and business inputs, it makes sense to better distribute the tax burden by broadening the sales tax base.

Although we haven’t yet agreed on a solution, no one’s arguing that our current system is well-balanced. In 2023, local political subdivisions across the state collected property taxes totaling just over $5.3 billion. The state, in turn, provided $345.6 million in property tax credits to Nebraskans and reimbursed local subdivisions for $142 million worth of Homestead exemptions. Local cities also collected some additional sales taxes from their “local option” sales taxes but at much lower rates than what the state collects. Meanwhile, the state collected $2.3 billion in state sales taxes (5.5% rate) and approximately $4.3 billion in income taxes. Clearly, property taxes are leading the way when it comes to tax burden.

Not only are more property taxes collected than sales and income taxes, but property taxes have ballooned quickly. In 1985, local property tax collections across the state totaled $1 billion. It took 18 years for that total to grow to $2 billion. Just eight years later, we hit $3 billion; six years after that, we hit $4 billion. At the current rate of growth, total property tax collections will soon total $6 billion.

From my vantage point, we have seen a huge tax shift to property taxes due primarily to a lack of fiscal restraint, unfunded mandates, and unfettered budget growth. I am confident that future plans will address all these issues. Without addressing local property tax growth, there will never be enough funding from the state to reduce the property tax burden. The Governor has publicly stated that he will be asking lawmakers to frontload the LB1107 credits, place hard caps on local government spending to about 2%-3% annual increases, and trim $500 million in state spending without eliminating services. This would be in addition to expanding certain sales tax exemptions. We still have much work to do.

I look forward to continuing to hear from you regarding issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.