Opponents of tax increases in Pillen property tax plan put pressure on Nebraska lawmakers (2024)

LINCOLN — Opponents of the tax increases in Gov. Jim Pillen’s property tax proposal are ratcheting up pressure on Nebraska lawmakers to kill the plan.

With a final vote on the plan set for Thursday, they have launched a barrage of advertisem*nts in newspapers, digital media, radio and television. Although sponsored by different groups, the ads urge Nebraskans to contact their senators in opposition to Legislative Bill 388.

“A massive tax increase on everything from granola bars to sports drinks to pet vaccinations and topical pain relief. LB 388 would increase taxes by a whopping $250 million,” said one ad that ran in the state’s largest newspapers.

That ad was sponsored by the Nebraska Grocery Industry Association. A digital ad taken out by the National Association of Convenience Stores sounded a similar theme.

“Please reject the notion that property tax relief can only be achieved by raising taxes on the middle class and vote NO on LB 388,” the ad said, in part, in a message to be sent to lawmakers.

The ads target the taxes that LB 388 would add to a variety of goods and services as part of the property tax plan. Pillen spokeswoman Laura Strimple described the changes as part of the “foundation for property tax reform” and a “great first step.”

State Sen. Lou Ann Linehan of the Omaha area, the Revenue Committee chairwoman and the introducer of LB 388, said the ads falsely claim that the bill would impose sales taxes on food. The measure would add sales taxes to pop and candy but other food would remain untaxed.

“They are lying,” she said. “We’re not taxing food, and it’s disingenuous to say we are. We’re taxing nonessential things. What they’re doing is awful. They’re scaring people.”

But Ansley Fellers, executive director of the grocers group, disagreed and said the “pop and candy” label is misleading. She said retailers would have to read product labels to figure out what should be taxed and what remains exempt, based on the definitions in the bill.

For example, she said, FritoLay’s Munchies Honey Roasted Peanuts would be taxed but the Munchies Dry Roasted Peanuts would not. Snickers bars would be taxed but a Nestle Crunch bar would not. A bottle of raspberry iced tea would be taxed but the unsweetened iced tea would not.

“This is food for human consumption,” Fellers argued.

Along with pop and candy, LB 388 would impose sales taxes on veterinary care and other services for pets, lottery tickets, storage services and dry cleaning.

It would put a 20% tax on vaping products, a 25% tax on CBD and hemp products, a 7.5% tax on digital advertising services offered by businesses with gross revenues of more than $1 billion and an additional 36 cents on a pack of cigarettes.

Revenue collected from the new taxes would go toward replacing an existing property tax relief program with new school property tax credits. Pillen’s staff said the change, along with others passed in the last year, would mean that property owners make payments averaging about 22% less.

Property owners who take advantage of the current program, which offers income tax credits to offset school property taxes paid, would see no net savings. However, they would see the savings upfront and avoid the hassle of claiming the income tax credits months later.

The additional revenue would be needed because the new school property tax credit program would cost an estimated $750 million, up from the $560 million provided for the current program. In the three years that the income tax credits have been offered, up to 40% of the available credits have not been claimed.

Pillen started out the year by calling for a 40% reduction in property tax payments. To pay for the cuts, he floated the idea of a 2-cent increase in the sales tax rate, plus adding taxes to several goods and services. The Revenue Committee advanced LB 388 with a 1-cent sales tax hike and a shorter list of goods and services, which would have achieved about a 30% property tax reduction.

But the proposed sales tax increase became the target of heavy lobbying from business groups, anti-tax advocacy groups and think tanks of varying political stripes. The strong opposition threatened to sink the bill.

The current scaled-back version of LB 388 does not increase the sales tax rate. It’s not clear whether it can garner enough votes to pass, however, especially after the calls and messages to senators’ offices generated by the opponents’ advertising.

LB 388 cleared the second of three rounds of debate on a 28-14 vote. That’s three more than needed to simply pass but two short of the number needed for the bill to take effect immediately. It’s five short of a filibuster-ending cloture motion, if opponents decide to pursue that strategy.