Nebraska Legislature Begins Special Session on Property Taxes, Bills Impacting Renewable-Energy and Municipal Law
The Nebraska Legislature convened a Special Session on July 25, 2024. Governor Jim Pillen called the Special Session “to fix the state’s property tax crisis.”
Under legislative rules, senators had three legislative days to introduce legislation. Senators introduced 81 bills and 24 constitutional amendments. All of those received a public hearing by the end of last week.
The Legislature is currently on recess until August 6, 2024. According to Speaker John Arch, the Revenue Committee will use this recess to negotiate an omnibus bill merging the various proposals.
Senators will debate the omnibus bill later this week. Every legislative proposal is on the table, though it remains unclear if the Legislature can agree on one package. We offer this mid-recess analysis of three bills that would impact renewable-energy and municipal law.
Nameplate Capacity Tax on Renewable-Energy Projects
Legislative Bill 35 (Sen. Tom Brewer) proposes to increase the nameplate capacity tax on renewable-energy generation facilities. Currently, those facilities pay property taxes of about $500 to $1,000 per megawatt of nameplate capacity and a statutory excise tax of $3,518 per megawatt. Neb. Rev. Stat. § 77-6203(1). Beginning in 2025, this bill would increase the excise tax rate annually “by the percentage change in the Consumer Price Index for All Urban Consumers.”
The Revenue Committee heard testimony on this bill on August 1, 2024. Opponents of the bill argued it would disincentivize investment in rural Nebraska and jeopardize existing renewable-energy generation facilities that already negotiated energy-offtake prices.
Residential Solar Panels
Legislative Bill 62 (Sen. Justin Wayne) would create the Solar Panel Energy Property Tax Reduction Act. It would allocate up to $2,000,000 in grants for the Nebraska Department of Natural Resources to distribute for Nebraska property owners to install solar panels on their property.
Property owners could apply for a maximum grant of $5,000 each. Eligible expenses would include the purchase and installation of solar panels. The Department would need to prepare an annual report documenting grant awards under the Act.
On August 1, 2024, the Natural Resources Committee heard testimony on this bill. Proponents of the bill argued it would encourage distributed solar-energy generation throughout the state.
Public-School Funding
Legislative Bill 81 (Sen. Steve Halloran) proposes a sunset for the Tax Equity and Educational Opportunities Support Act (“TEEOSA”). TEEOSA is the current finance formula for Nebraska public schools.
Under TEEOSA, school systems receive baseline “foundation aid,” and certain under-resourced systems also receive “equalization aid” from the state. “Equalization aid” is how much the school system’s “formula need” exceeds its “formula resources.” “Formula need” means the amount a school district needs, given its size, to operate for the following school year. “Formula resources” means the system’s liquid funds plus generated property tax revenue. §§ 79-1001 to 79‑1033.
This bill would terminate TEEOSA after the 2026-2027 fiscal year. Depending on other legislation, TEEOSA would potentially have a replacement.
For instance, Legislative Bill 1 (Sen. Lou Ann Linehan, at the request of the Governor) would replace TEEOSA with a state-funded Education Future Fund It would also eliminate various sales-tax exemptions, increase sin taxes and cap the “property tax request authority” that political subdivisions may exercise to generate new revenue and.
However, Legislative Bill 81 deals only with sunsetting TEEOSA. The Education Committee heard testimony on Legislative Bill 81 on August 1, 2024.
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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.
