Property tax special session could be among costliest in Nebraska history

Gov. Jim Pillen talks about his property tax proposal during an interview with the Nebraska Examiner on Dec. 27, 2023. (Zach Wendling/Nebraska Examiner)

LINCOLN — If Nebraska Gov. Jim Pillen calls lawmakers back for a property tax relief special session later this year, it could be among the costliest in state history.

Pillen, in his second year as governor, has remained firm in vowing to “call as many special sessions as it takes” in his pursuit of reducing local property taxes by 40% before year’s end , or about $2 billion of what is collected annually. Initial cost estimates could push per-day costs to about twice what the last special session cost in 2021, for redistricting.

In his April 18 end-of-session speech, Pillen said it was unacceptable that lawmakers failed to enact one cent of extra property tax relief.

“Enjoy halftime. We’ll see you again here soon,” Pillen said.

The governor’s ideas for a “broad-base tax decrease” include:

• Asking lawmakers to front-load already approved property tax credits for income taxes paid so more Nebraskans receive them.
• Placing hard caps on local government spending, at about 2% or 3% annual increases.
• Trimming $500 million in government spending, while not eliminating services.

Funding his ideas could come in the form of eliminating some of the more than 100 sales tax exemptions and accepting more federal funding to augment state services, he outlined last week.

Special session cost estimates

Estimates from the Legislature’s accounting office include breakdowns for special sessions of varying lengths this year:

• Five days: $79,686 ($15,937.20 per session day).
• Seven days: $130,165 ($18,595 per session day).
• Ten days: $174,876 ($17,487.60 per session day).

Three years ago, senators returned for a 13-day session on redistricting, which cost a total of $105,436, or $8,110.46 per session day. If the estimates hold, it would be the largest per-day cost increases between sessions in Unicameral history.

Shelley Reed, legislative business manager for the Legislature, said it’s difficult to determine the exact cost until the length of a special session is known.

“There’s a lot of factors that play into the numbers, therefore all we can provide is estimates,” Reed said in an email.

Those factors include staff salary increase; whether legislative employees work overtime; per diem and mileage reimbursements for lawmakers; and printing costs. Security costs might be a factor for the Nebraska State Patrol and sergeants at arms.

Legislative staff received a 15% salary increase effective July 1, 2023, and will get another 15% increase again this year on July 1, a boost funded through existing legislative carryover funds.

Lawmakers have historically appropriated more than what is reported for a special session through the biannual “ Nebraska Blue Book ,” which records state history, facts about the Legislature’s history and more.

Across seven special sessions between 2001 and 2021, for example, approved appropriations were on average $22,000 more than what was reported.

Reed confirmed it’s possible the estimates could be in excess of actual costs.

‘A different tenor and tone’

Pillen is leading several town halls across the state to drum up support for his plans. Asked after his event last week about the potential cost of a special session, Pillen said, “My response to that we ought to cut down introducing 1,400 bills. That’d be the really good savings in the Unicameral.”

Lawmakers passed a rule change hoping to reduce the number of bill introductions beginning next year, limiting senators to 20 bills each , though many opponents questioned whether the rule change would actually lead to fewer bills.

State Sens. Ray Aguilar of Grand Island and Danielle Conrad of Lincoln, the Legislature’s longest current serving members, each have served through multiple special sessions under different governors. For Aguilar, five sessions across his 1999-2009 service and once in 2021; for Conrad, three sessions during her 2007-2015 service.

About half of the current state senators served during the most recent special session, in 2021.

Aguilar and Conrad said special session cost is one factor to consider, with Aguilar noting it’s up to the governor to ensure a session is called only if an idea has enough votes to be successful.

Conrad said the nice thing about a special session is it’s focused on a discrete issue or set of issues instead of hundreds of bills or budgetary concerns, which also cuts down on some “horse trading” that can play across various issues in a regular session.

“It’s a different tenor and tone. It’s a different focus,” Conrad said.

Aguilar and Conrad crossed paths in their previous service, including the November 2008 special session called to fix the state’s new safe haven law , which was intended to allow parents to relinquish unwanted newborns without legal repercussions. Instead the new law prompted families to give up 36 children to the state, mostly adolescents.

The law was revised to apply only to infants up to 30 days old.

What makes a successful session?

Conrad said a successful special session comes with clear consensus around the identified goals or issues which have been consistently and clearly communicated to lawmakers. That, she added, should come before the governor’s proclamation calling a session.

Beginning in 1971, lawmakers began meeting every year for regular sessions. Since then, special sessions have ranged from seven days to 16 days. They are not limited to a certain length, and Conrad warned of a “runaway session” if the governor and senators are not careful.

At the same time, a governor’s call does not necessarily mean the session will be successful, and senators could gavel in and gavel out on the same day.

“But when you have governors working hand-in-glove with the Legislature, I think that dramatically increases and enhances the chance to have a really effective special session,” Conrad said.

Aguilar, who serves as chair of the Executive Board, the Legislature’s second-highest ranking member, said “you have to have all your ducks in a row before you get into it.”

“Nobody wants to go in and spend, you know, six weeks down there filibustering,” Aguilar said. “If we’ve work to do, we want to get something accomplished and get down there and do it.”

Opposition to original plan

Conrad said Pillen’s property tax plans set an “arbitrary” goal that is not “moored in reality,” which could hinder success.

“I don’t think that doubling down on one of the largest tax increases in history is going to be a successful recipe for a special session,” Conrad said.

State Sen. Lou Ann Linehan of Elkhorn, who chairs the Legislature’s Revenue Committee, led the latest tax proposal, Legislative Bill 388, before withdrawing it on the last legislative day of the regular session.

She said it was “ridiculous” and “insane” to label LB 388 as among the largest increases in state history, pointing to two other points in time: 1967, with the enactment of state sales taxes, and 1990, with a new school funding method, also enacted to reduce property taxes.

Linehan declined Wednesday to comment on ongoing work to consider Pillen’s ideas and plans.

Special session logistics

Special sessions may be called in two ways: by the governor or by at least two-thirds of the Legislature, or 33 lawmakers. In either case, the call is limited to whatever the governor or senators request, and legislation cannot extend beyond those limits.

Introduced legislation does not have to revolve around one subject, though many sessions, such as redistricting, have.

Multiple state senators have floated the need to expand the state’s tax base, such as through legalizing and taxing online gambling or marijuana sales, though another major call could be introduced to allow taxpayers to sue political subdivisions in certain cases of child abuse or sexual assault.

State Sen. Justin Wayne of Omaha, who shepherded that latest measure, has said a special session is needed to narrow the immunity that state agencies or public schools have. He has threatened not to return for a special session if a fix isn’t on the table.

After the Nebraska Supreme Court further expanded immunity for political subdivisions in a recent decision, Conrad said senators might try to make history and call their own session to resolve that issue.

Thirty-six special sessions have been called since 1937, when the Unicameral was established. All have been initiated by the governor.

For senators to call a special session, at least 10 must submit written notice of their proposed call to the Nebraska secretary of state, who must then poll every lawmaker to see if at least 33 senators are part of the effort. If that threshold is passed, the governor is then obligated to convene the session.

Session timing

Conrad said earlier this month that conversations about a special session were ongoing, and because Pillen’s veto letter for LB 25 referenced taxes, lawmakers could try to find a roundabout way to revive the legislation.

“The governor’s exercise with his veto pen will not be the last word on this topic,” Conrad said last month .

Aguilar said he could “maybe” support a senator-led call for related legislation, though he wants to hear the pitch and any potential repercussions before signing on.

Pillen told the Nebraska Examiner he tried to work with Wayne and others on a solution to the immunity issue but stood firm in saying law enforcement, not taxpayers, should address the issue.

“I think we can work together, but we weren’t able to get it done in the session,” Pillen said.

He’s told reporters he remains “100% focused” on a property tax session and that a session is expected this summer before school starts in mid-August, shying away from his office’s more definitive late July timeline. He said his office anticipates making at least one trade mission, as well, to Indonesia.

“I’ve got the other responsibilities — I’ve got to defend Nebraska and grow Nebraska and sell it all over the world,” Pillen said. “… We got to work around a lot of commitments.”

Nebraska Examiner political reporter Aaron Sanderford contributed to this report.

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