Governor Pillen Calls for 40% Reduction in State Property Taxes

LINCOLN, NE -- Today, Governor Jim Pillen called for a 40% reduction in state property taxes in 2024. He is asking the Nebraska Legislature as well as chambers of commerce to partner in achieving that goal, stating it is a necessity for all Nebraskans.

“Property taxes are so out of whack, you don’t even need to own property to be adversely affected,” said Gov. Pillen. “We need to do this for the countless Nebraskans who have worked, raised a family, and educated their kids here, by giving them the opportunity to retire in Nebraska. Our current property tax structure is taxing lifelong Nebraskans out of their homes – it is unacceptable.”

Addressing high property taxes is the Governor’s top priority during the current legislative session.

“In 2023, state property taxes exceeded $5 billion. In the last six years alone, property tax collections skyrocketed $1.3 billion. We need transformational property tax reform to get us down to around $3 billion annually,” said Gov. Pillen.

The Governor convened a 40-person workgroup in July to study the issue of property taxes and home valuations. The group, made up of state senators, representatives from the Nebraska State Chamber of Commerce, the Lincoln and Omaha chambers of commerce, agriculture industry groups and others, all agreed it was not enough to keep property taxes level. A significant reduction was required.

“Nebraska is already the best place to live, work, and raise a family,” said Gov. Pillen. “In order to stay competitive with other low tax states, we need to reduce property taxes by 40%. This reduction will drive economic growth through workforce and new business development.”

Gov. Pillen wants to work with the Legislature to determine the right path forward. He made clear that any plan would incorporate a hard cap on county and city spending. The state, he said, would be leading by example.

“We will reduce state spending by 3% this fiscal year, followed by another 6% in fiscal year 2025, while ensuring that state services improve through efficiencies and technology,” said Gov. Pillen.

Proposals also include front-loading property tax credits instead of requiring taxpayers to claim them, to further provide state aid to schools and reduce state spending. It would also require expanding the state’s tax base.

“Everything is on the table. We must ignite this discussion,” said Gov. Pillen. “We must be bold and courageous in our pursuit of property tax reform, because we owe it to all Nebraskans.”

LINCOLN — Below are statements from OpenSky Policy Institute Executive Director Dr. Rebecca Firestone following Monday’s news conference on property taxes in Nebraska.

“Like all Nebraskans, we await specific proposals on the governor’s plan to reduce the property tax revenues that our cities, counties, schools and other local subdivisions rely on to fund the services that promote thriving communities from border to border.”

On reducing taxes just for property owners:
“Property taxes are just one part of the overall tax burden and potential shifts to more regressive taxes to make up the difference add strain on hardworking Nebraskans and their families. OpenSky supports proposals to target property tax reductions to income-constrained Nebraskans without threatening the revenue available to fund local services.

“Just last year, the Pillen administration passed aggressive income tax cuts largely benefiting the wealthy, and already, it’s hamstrung in what funding the state has available to respond to increases in property taxes.”

On suggestion that Nebraskans don’t pay sales taxes on necessities:

“It’s difficult for a Nebraskan who goes to work to get by without a car. And our young families, those so important to our state’s future, must account for the expenses of car seats, diapers and clothes. All of those items are subject to sales taxes in Nebraska, for which low- and middle-income residents pay a higher share of their income.

“A revenue system that targets opportunities that have a strong return on investment and where everyone pays according to their ability is critical in creating opportunities for everyday Nebraskans.”

Coming Tuesday: Distributional analysis of Nebraska’s tax system

On Tuesday, OpenSky Policy Institute will release a distributional analysis of tax systems in all 50 states compiled by the Institute on Taxation and Economic Policy.