Now that the special session has ended, it is time to reassess the progress made and chart the path forward from here. I’m looking forward to being able to spend more time in the District again. The Lincoln County Farm Bureau is hosting a town hall meeting at the McKinley Education Center at 6:30 p.m. on Saturday, September 21. I will be there to recap the special session, lay out my plans for the next session, and listen to your input on what is most important to you at that meeting.

In case you cannot attend, here’s a brief overview:

Governor Pillen brought a very aggressive property tax relief proposal to the Legislature that focused on eliminating sales tax exemptions, increasing so-called “sin” taxes, and using the new funding along with cuts in state expenditures and transfers of excess reserves to allow for the frontloading of property tax relief directly through your property tax statement. Although the new sales tax revenue was not approved, the frontloading of the property tax relief, the spending cuts, and the fund transfers were approved and will appear on your property tax statement next year.

The plan also placed caps on the amount that cities and counties can request from property taxpayers each year. This was a key component to help ensure that property taxes do not rise faster than inflation and the growth of local economies. Although these caps currently do not apply to public schools and other taxing authorities, there will be efforts in January to bring all political subdivisions under an appropriate cap. It is important to note that if there were no sales tax exemptions, the state would have collected over $7 billion in sales taxes in 2023. Instead, $2.3 was collected with the sales tax base. Total property taxes collected by local political subdivisions statewide was $5.3 billion in 2023.

It was clear early in the session that the progressives in the body were united in their opposition to any sales tax exemption repeals. They were joined by conservatives opposed to any new taxes, even if those new taxes would reduce property taxes. Although we were not able to bring more new revenue to replace property taxes, we were able to debate which proposed sales tax repeals could be on the table next session. That will be a starting point for the next Legislature. With the large number of term-limited Senators leaving the Legislature at the end of this year, the new freshman class will play a huge role in getting necessary legislation passed next year.

It is important to remember that all property taxes are assessed locally. About 50% or more of the property tax burden funds local public schools. Although the State has significantly increased its support of all public schools, the bulk of the state funding goes to the larger school districts. To the extent that the State can provide additional funding to public schools across Nebraska, reliance on local property taxes can be reduced.

As was done with community college funding, the Governor’s goal is to substantially fund general operating expenses for public schools with State dollars while still maintaining local control of public schools by locally elected boards. The primary change will be the funding source and the degree to which spending increases. The goal is to allow for spending to grow with the rate of inflation plus growth in students and other factors unique to individual schools; in other words, to meet the schools’ needs. Determining the right structure will take some time. I intend to meet with all public schools in District 42 before January to fully understand their individual challenges.

In addition to reforming our revenue collection and spending systems, we must continue to find ways to grow Nebraska. The greatest challenge to lowering our state’s tax burden is the fact that our state needs to grow by another 1 million residents. To do that, we must have a competitive income tax to attract and retain large employers to locate in Nebraska. We also need competitive property tax rates to make housing and new commercial development affordable. With investors’ interest in buying agricultural land as a hedge against inflation, we are seeing these properties’ values climb to lofty levels and taking the property tax burden up with the price increase. For those producers who are trying to make a living off the land, these taxes are devastating. In the end, all classes of real estate need relief if we want to be competitive.

This problem did not emerge overnight, and we will not find an overnight solution. It will be important for the next legislature to find common ground when solving our tax challenges. I am committed to working with the incoming freshmen, and those who do not align with me politically to find that common ground.

It is a privilege to represent you in the Nebraska Legislature, and I look forward to hearing from you regarding issues that are important to you. I can be reached at 402-471-2729 or by emailing me at mjacobson@leg.ne.gov.