A slimmed-down property tax cut measure that would limit annual increases in local governments’ property tax bills advanced to final reading on Aug. 16 after lawmakers made changes to adjust the cap.

With the amendment contained in the general file, LB34, introduced by Senator Tom Brewer of Gordon, would create a program to advance state funds currently earmarked for a refundable earned income tax credit against property taxes paid by school districts.

The bill would allow cities, counties and villages to increase their authority to levy property taxes by the product of two factors:
• the amount of property taxes collected in the previous year plus a growth percentage that reflects the total increases in the value of the property due to new construction, improvements and certain other changes, less any exemptions used; and
• the higher of zero or the annual percentage change in a price index that tracks state and local government spending.

One of several exceptions to the proposed limit would allow a political subdivision to increase its authority to levy a property tax by an amount approved by a majority of voters at the next regular election.

In a special filing, Elkhorn Senator Lou Ann Linehan introduced an amendment that, among other technical changes, would allow the matter to be put to voters in a special election called for that purpose in odd-numbered years.

Senator Jana Hughes of Seward supported the change, arguing that most Nebraska counties currently hold elections only in even-numbered years.

The amendment was adopted by 37 votes to 11.

Linehan introduced another amendment that she said would allow LR2CA, sponsored by Senator Tom Brandt of Plymouth, to be included on the November 2024 ballot if passed by the House during a special session.

Under Brandt’s proposal, voters could amend the state constitution to allow the legislature to determine that owner-occupied housing represents a separate and clearly distinguishable class of property for tax purposes and that a different method could be used to tax such property than other types of property.

The Chair ruled that Linehan’s amendment was not related to the underlying bill. She challenged the decision, but her motion to overrule the Chair was defeated by a vote of 15 to 30.

Senator Justin Wayne of Omaha also proposed an amendment that would require the second factor in calculating the authority to require property taxes to be either the greater of 2.5% – rather than zero – or the percentage change in the index, a change he said would give local governments more flexibility.

The amendment was rejected by 18 votes to 27.

After a four-hour debate on selected items, Brewer moved to end debate and force a vote on the bill and all of its underlying motions and amendments. The motion passed by 41 votes to 7. Thirty-three votes were required.

Lawmakers then voted 39-8 to forward LB34 to final reading.