August 2, 2024

2024 Special Session

Committee Hearings Ending, Debate Begins

The Nebraska Legislature met today for Day 7 of the 2024 Special Session. Overall, there have been 81 bills and 24 constitutional amendments introduced following Governor Jim Pillen’s proclamation calling for a special session to address property tax relief. Legislative rules require all bills to be heard in committee hearings within five days of being referenced to a committee. As such, the Revenue Committee will continue hearings tomorrow to wrap up a marathon six days in a row of committee hearings. This includes a 10-hour hearing on LB 1.

LB 1 was introduced by Senator Lou Ann Linehan (Elkhorn) on behalf of Gov. Pillen and represents the major portion of his plan to cut property taxes. The NBA Board of Directors and Government Relations Committee met in a joint meeting on Monday, July 29, to discuss LB 1. The Board voted unanimously to oppose the bill as drafted and to seek amendments to eliminate sales taxes on certain business inputs. The NBA’s letter submitted to the Revenue Committee can be found here.

The Revenue Committee heard testimony from individuals, business owners, government officials, and lobbyists from all over the state, with a majority of the testimony being opposed. As introduced, LB 1 would accomplish the following:

1) Adopts the Property Tax Growth Limitation Act to cap local government (counties, cities and villages) property tax requests by the greater of CPI or 0%; provides exceptions for real growth, personnel costs for public safety or public health, or by a vote of the people at a regularly scheduled election. 
 
2) Adopts the School District Property Tax Relief Act to create a property tax credit payable directly to schools in the amount of $2.33 billion in 2025 and increasing each year thereafter.
 
3) Implements the Advertising Services Tax Act, implementing a 7.5% tax on the gross advertising revenues for those entities with a combined gross advertising revenue in excess of $1 billion.
 
4) Implements new taxes on services and eliminates exemptions for more than 100 products and services including legal services, accounting services, lobbying services, real estate agents and appraisers, investment advice, travel agency services, real property maintenance, loan broker services, tax return preparation, marketing and telemarketing services, information, data processing, mainframe computer access and processing, and other cloud-based and data storage, processing and co-location services, including core banking and related software services at banks. 
 
5) Increases “sin taxes” on spirits, cigarettes, games of skill and consumable hemp products. 
 
6) Retroactively to January 1, 2024, eliminates proration of income for shareholders of S-corporations. 
 
7) States an intent to reformulate school funding to lower property taxes in the future.
 
In addition to the 51 bills and constitutional amendments referenced to the Revenue Committee, an additional 54 bills and amendments were referenced to other committees that have met throughout the week. The Revenue Committee will meet on Monday and Tuesday of next week to discuss LB 1 and other bills heard this week. Speaker John Arch (La Vista) announced this morning that the Legislature will reconvene next Wednesday, August 7. Debate is expected to commence on LB 1 on Thursday, August 8. Beyond that, the schedule for the remainder of the session remains unclear. Speaker Arch indicated it is likely that debate will continue on Friday and Saturday of next week. He does not plan to schedule any other bills until LB 1 has been fully considered.

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