Nebraska Legislature Adjourns Special Session after Passing Property Tax Reform Bill

On August 20, 2024, the Nebraska Legislature adjourned sine die.  This came nearly a month after Governor Jim Pillen called a Special Session “to fix the state’s property tax crisis.”

During the Special Session, senators introduced 81 bills and 24 constitutional amendments.  Several measures would have significantly impacted renewable-energy development.  We summarized those measures after bill introduction.  They did not pass.

Ultimately, the Legislature adopted one significant substantive bill.  Legislative Bill 34 (Sen. Tom Brewer) enacts the Property Tax Growth Limitation Act and School District Property Tax Relief Act. 

The Property Tax Growth Limitation Act caps political subdivisions’ taxing authority.  Beginning in 2025, taxing authority may be no more than the amount of property taxes the political subdivision levied in the previous fiscal year, subject to adjustments.

A political subdivision’s taxing authority will reduce by the amount of property taxes it budgeted in the prior fiscal year for approved bonds, responses to a declared emergency, public safety, interlocal agreements and county attorneys and public defenders.  Taxing authority will increase during periods of inflation by a statutory growth percentage.  Political subdivisions’ registered voters may also approve an increase in taxing authority.  Political subdivisions may annually carry forward up to five percent of unused taxing authority.

The School District Property Tax Relief Act will appropriate state money as property-tax credits against the amount landowners pay to local school districts.  Homesteads will qualify for the credit.

The Legislature intends to permanently fund these property-tax credits.  But the Special Session only yielded appropriations through 2026.  The bill’s companion, Legislative Bill 34A (Sen. Tom Brewer), appropriated $750,000,000 for fiscal year 2025-2026 and $780,000,000 for fiscal year 2026-2027.

Legislative Bill 34 and its companion both passed on final reading, and Governor Pillen signed them on August 20, 2024.  Because the bills contain an emergency clause, they take immediate effect.

Before adjourning, several senators also attempted to invoke cloture on Legislative Resolution 2CA (Sen. Tom Brandt), a constitutional amendment that would have provided a separate class of taxation for owner-occupied housing.  Cloture on that resolution failed. 

The Legislature then voted to adjourn sine die.  Governor Pillen characterized the Special Session as a “nice start” and stated he will push for further property tax reform in January 2025.

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Attorneys at Baird Holm LLP are registered Nebraska lobbyists and have experience counseling renewable-energy and municipal law clients on various matters including taxation.  Please reach out if you have questions about these bills.