Nebraska Legislature advances measure to tax owner-occupied homes differently

Sen. Lou Ann Linehan of Elkhorn (left) speaks to Sen. Tom Brandt of Plymouth during the first day of the special legislative session on July 25 at the Capitol.

KATY COWELL, Journal Star file photo

The Legislature gave first-round approval to a proposed constitutional amendment that would allow future lawmakers to tax owner-occupied homes at lower rates than other properties in Nebraska.

A day after being advanced to the floor by the Revenue Committee, the proposal (LR2CA) from Sen. Tom Brandt of Seward was moved to the second of three rounds of debate on a 32-14 vote.

If LR2CA receives 40 votes on the final round of debate, it will be voted on this fall. If it receives 30 votes on final reading, the measure won’t be put before voters until November 2026.

Should LR2CA receive fewer than 30 votes on final reading, it would not be considered by Nebraska voters.

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Brandt said the constitutional amendment, if approved by voters, would give the Legislature the power to offer “targeted property tax relief specifically to owner-occupied properties.”

“This idea came to me after hearing numerous stories from constituents and, actually, other senators about them struggling to keep up with rising property taxes,” Brandt said on Friday.

By giving the Legislature the authority to reduce the rate at which owner-occupied homes are taxed, Brandt said LR2CA would give lawmakers a similar tool to one that has been around since the 1980s for agricultural land.

Agricultural or horticultural land is currently taxed at 75% of its assessed value, while all other properties in Nebraska are taxed at or near 100% of their value.

“This differentiation was established by our predecessors in recognition of the vital role the agricultural industry plays in our state,” Brandt said. “LR2CA aims to acknowledge another crucial group within our state: homeowners.”

During afternoon floor debate on Day 14 of a special session called by Gov. Jim Pillen focused on reducing property tax burdens, other senators hailed Brandt’s proposal as a practical idea to deliver real relief to homeowners.

But some senators said they were leery of adopting an amendment that would allow LR2CA to be considered this fall, saying it would be too close to the general election for voters to be educated on its pros and cons.

Sen. Mike Jacobson of North Platte, echoing opposition he gave during a meeting of the Executive Board on Thursday to several bills that would have allowed constitutional amendments to be put to voters this fall, said the Legislature was moving too fast.

“If this would happen, we would look at putting it on the ballot 30 days before early voting would start,” Jacobson said. “That’s insane.”

The Legislature could send LR2CA to Secretary of State Bob Evnen as early as Tuesday, well before several ballot initiatives that submitted tens or hundreds of thousands of signatures have been certified for the ballot.

Earlier this week, Evnen’s office announced the first of a half dozen measures had qualified for the ballot, adding that a review of the others was ongoing.

The amendment, which would allow LR2CA to be considered at “a special election to be held in conjunction with the statewide” election, was adopted on a 28-17 vote.

Other senators cautioned the Legislature to move more slowly, saying lawmakers were not fully aware of the potential impacts such a change might have on the state.

“If you push on a balloon on one spot, where do you pop out on the other side?” said Sen. Brad von Gillern. “We don’t know if ag is going to suffer from this, if commercial is going to suffer. I think we need to take a little more cautious approach to this concept.”

Elkhorn Sen. von Gillern was part of an 8-0 vote to advance LR2CA from the Revenue Committee on Thursday. During Friday’s debate, he said he believed reducing the rate at which owner-occupied homes are taxed would result in increases for commercial or ag properties.

And Lincoln Sen. Jane Raybould also urged the Legislature to slow down, saying the potential effect of LR2CA “certainly needs to be fleshed out” and that it could negatively impact businesses across the state.

Backers of the proposal, led by Omaha Sen. Justin Wayne and Sen. Lou Ann Linehan of Elkhorn, dismissed the concerns raised by opponents, however.

Should voters approve the amendment, it would still be up to the Legislature to decide how to change the tax rate for owner-occupied residential properties — something the Legislature might not do, said Wayne, who championed the measure on the floor this week.

“It allows the Legislature to have more tools,” he said. “There’s no change in valuations, it doesn’t affect TEEOSA (the state aid formula for schools), it doesn’t change ag values. It allows the Legislature next year to have more tools in the toolbox.”

Linehan said Nebraska is one of the few states that does not have the option of taxing owner-occupied homes at different rates than other properties.

“Voting against this, the Legislature is tying their hands,” she said, adding later that senators would need to think carefully about the response from homeowners in their districts before opposing the amendment.

Two other constitutional resolutions have not been scheduled for debate:

* LR1CA from Sen. Carol Blood of Bellevue would prohibit the Legislature from imposing unfunded mandates on local government boards in the future.

* LR3CA from Lincoln Sen. Eliot Bostar would give the Legislature authority to legalize and regulate online sports betting.

On Friday, a coalition of senators announced the continued opposition to bringing LR3CA to the floor for debate.

“Nebraska very recently legalized casinos largely on the promise of property tax relief that has failed to manifest itself,” the senators wrote in a joint statement. “Expanding gambling further will inevitably lead to expanding the associated addictions and adds to more suffering in our communities.”

The statement was signed by Sens. John Lowe of Kearney, Ray Aguilar of Grand Island, Joni Albrecht of Thurston, Rob Clements of Elmwood, Rob Dover of Norfolk, Steve Erdman of Bayard, Steve Halloran of Hastings, Brian Hardin of Gering, Rick Holdcroft of Bellevue, Loren Lippincott of Central City, Dave Murman of Glenvil, Rita Sanders of Bellevue and Julie Slama of Dunbar.

The special session of the Legislature is scheduled to continue Saturday and again next week.

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