A 40% drop in statewide property tax collections in one year?
That’s a huge goal Gov. Jim Pillen set forth last week in his State of the State address and in flying stops in Scottsbluff, North Platte and Kearney.
All it takes, just to try to cut $5 billion in 2023 tax bills to $3 billion in 2024, is buy-in from at least 33 state senators in a short session with endless issues backed up from filibuster-plagued 2023.
Will Pillen’s plan pass in 2024? We’ll see.
Should it? Well, we have questions.
But the governor’s proposals are less reckless with Nebraska’s fiscal future and economic health than the scorched-earth petition drive to outlaw property, income and current sales taxes at once.
During his Lee Bird Field stop, by the way, Pillen offered the most succinct argument we’ve heard against yoking state and local finances to a “consumption tax” on new goods and services imitated by precisely none of Nebraska’s border states (or any other).
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He’s convinced farmers, ranchers and businesses would “be buying all of our inputs across the border” if that happens.
Meanwhile, “we can think for ourselves, and we don’t like taxes, right? So if we tell each other that the only time we pay tax is what we buy, you think we’ll buy more? Or less?
“We’re of course going to buy less, and it’s going to kill our Main Street economies.”
Ponder that while we return to Pillen’s property tax plan.
It starts with simplifying $750 million in tax relief already being delivered — to those who claim it — by redirecting refunds from the K-12 property tax credit on state income taxes straight to local governments. The parallel community college tax credit already will be replaced by a state takeover of most of their funding.
Good. As we’ve said the past few years: Is it really property tax relief if Nebraskans don’t know it’s there?
That covers half of the $2 billion in property tax payments he wants to offset, Pillen says.
Generating the other $1 billion depends on what predecessor Pete Ricketts wouldn’t hear of doing: raising the state sales tax rate and trimming the lengthy list of sales tax exemptions.
Nebraskans are ready to consider that, the governor said. Are they?
Finally, in an effort to ensure actual property tax cuts, Pillen would extend 2023’s first-ever lid on school property tax requests to all local governments.
And he wants to harden it. Tax requests could grow as local tax bases grow and as voters allow — but not to make up for inflation.
Would Nebraskans be happy if they find as a result that their water pipes and sewers aren’t getting fixed and schools’ class sizes are getting bigger?
Finally, how would local governments share Pillen’s extra $1 billion in tax relief? Schools would get at least those redirected dollars from income tax credits. But cities and counties haven’t gotten general state aid for decades. Would they now?
With that, senators, go to your corners and come out talking.
