Governor prioritizes property tax relief, education investment

Calling the upcoming session “the most important time in the history of our state,” Gov. Jim Pillen outlined a series of tax proposals and funding changes to the state’s education system in his first State of the State address to senators Jan. 25.

Property taxes are a “burden” on Nebraskans, Pillen said, and his state budget proposal includes $2.4 billion in additional property tax relief, funded in part by adding $390 million in general funds to the Property Tax Credit Relief Fund and calling for full reimbursement of property taxes paid toward community colleges through a refundable income tax credit.

The governor emphasized the importance of retaining young Nebraskans and bringing in new residents as one impetus behind his push for property tax relief — particularly at a time when the state is in a strong fiscal position.

“Like many of our neighboring states, we have more money in our coffers than anyone can believe or quite frankly comprehend,” he said.

The governor detailed a number of additional “transformative” proposals to address what he called the state’s “broken tax system,” starting with a measure that would change the valuation of agricultural and horticultural land from market-based to income-based assessment and cap agricultural land valuation growth.

The budget also recommends $1.5 billion in additional tax cuts to individuals, families, businesses and Social Security recipients. This would be accomplished by lowering individual and corporate income tax rates to 3.99 percent by 2027 and exempting Social Security income from taxation by next year.

Doing so would make Nebraska more competitive, Pillen said.

He also asked lawmakers to support his “vision and strategy” to shrink the scope and size of state government. To achieve that goal, the governor’s budget proposal calls for a two-year average growth rate of 1.3 percent, and would limit the University of Nebraska to a 2 percent increase in its operational budget.

“We must have the courage to say ‘no’ to overspending and maintain a focus of investing in our kids and giving this money back to Nebraskans via historic property and income tax cuts,” Pillen said.

The governor also unveiled a proposal to provide “structural reform” in how the state funds public schools by providing an additional $1,500 per student to every public school in the state, which he said would ensure that education funding is distributed more equitably.

Pillen’s budget proposal also would create an Education Future Fund, with an investment of $1 billion in fiscal year 2023-24 and an additional $250 million each year going forward. Dollars would be used to fund special education in Nebraska, and to provide $50 million for private school “opportunity” scholarship tax credits.

Additional projects in the governor’s budget proposal include $574.5 million to fully fund the Perkins County canal project, $100 million for bridges and roads and $95 million toward completion of a replacement for the aging Nebraska State Penitentiary.

“We, the people of Nebraska, have the grit and determination needed to solve our problems — overcome the difficult obstacles — no matter the circumstances,” Pillen said. “Together we can; together we will; together we win.”