Governor Jim Pillen has made his top legislative priority for 2024 clear: reducing local property taxes by an overall 40%.
During a luncheon address this week, an earnest Pillen in made clear to members of the Lincoln Chamber of Commerce, “We’re going to get to 40% if we have to have a (legislative) session every day until Christmas.”
To do this, Pillen’s plan is to pull in an additional $2 billion in state revenue. Some of these funds are being cleared up from current state spending, though various bills before the State Revenue Committee (currently TBD if they advance). This leaves a remainder of $1 billion in additional funds. Pillen has reiterated, the other part of his plan to reduce the amount of property taxes paid to fund cities, counties and school districts includes a proposal to raise the state sales tax rate by 1 cent — from 5.5% to 6.5%, making Nebraska the 9th highest sales tax state in the nation.
Pillen previously backed down from a starker 2 cent sales tax increase, which would have made Nebraska the highest sales-tax state in the nation.
While any sales tax increase is generally unpopular with the public, The Lincoln Chamber of Commerce has also came out against Pillen’s proposal. Chamber President Jason Ball and VP/General Counsel Bruce Bohrer voiced their concerns on KLIN’s Thursday episode of the Dan Parsons Show.
“There are some areas of discomfort that our board and our business community leadership has with some of what he’s talking about,” said Ball. “There are a lot of changes the wind, and many of them will land disproportionately on small business, mom and pop or personal startup businesses. We have some concerns about the burden that’s going to place on them.”
Ball explained how Nebraska competes with neighboring states to entice businesses to set up shop in the here. There is concern from the Chamber that a sales tax hike could hamper their ability to sell companies on the cornhusker state. “Thinking just a little bit more broadly about what the impacts could be, doing some real data focused analysis, in our organization’s view really has not been done to the extent needed when we’re considering these kinds of extensive changes.”
The Lincoln Chamber isn’t the only entity concerned about a sales tax increase, Bohrer explained, “We work very closely with the Omaha Chamber, Nebraska Chamber and Commerce, industry, and other groups that maybe have involved. They’ve weighed in on this. The tax foundation, a group that puts together really solid economic research based out of D.C., released something opposed to this… It moves us in the wrong direction.”
A 1 cent sales tax increase, according to Ball, could reverberate and effect the City of Lincoln specifically. He explained that Lincoln’s street improvement initiative dubbed “Lincoln on the Move” is funded by a voter approved 0.25-cent sales tax boost.
“If we want to continue that ability to invest a quarter cent sales tax locally in our streets and roads, we will have to go back to the voters and seek approval,” Ball said, “If we’ve also increased the state sales tax by one whole cent. I don’t know how comfortable voters are going to be with renewing an additional quarter cent sales tax, and I think people really need to keep that in mind.”
Whether state lawmakers will be quarantined in the State Capitol until Christmas is too be seen. During an executive session of the Revenue Committee, Committee Chair State Sen. Lou Ann Linehan told members to enjoy a four-day Presidents Day weekend break, and be ready to work on tax relief proposals when they return on Feb 20th.