Paul Hammel: Pillen plan watered down, but still did away with need to ask for a tax break (2024)

State lawmakers have long since finished their long, 17-day special session in Lincoln and headed back home.

The summer session unfolded as a lot of people, including me, expected — a lot of ideas for reducing property taxes were discussed, but only a small, incremental change, one that will result in a 3% drop in property taxes for some taxpayers, was passed.

As we’ve discussed before, reducing property taxes, while a noble and needed move, is a complicated task and requires an adept hike across a political minefield.

The plan finally advanced by Gov. Jim Pillen whipped up a cyclone of controversy by requiring a major shift of taxes — a shift that benefitted some taxpayers (including the governor and his hog operations) and handed a larger tax bill to others.

But the State Legislature did make one worthy change by eliminating the need for taxpayers to request a state tax credit.

I always thought it was a bad idea to require people to do some complicated calculations and fill out a line on a state income tax form to get a tax refund.

Why not just send people a check, I wondered?

A little background:

The State Legislature, over the years, has adopted two state credits against payments of local property taxes in an attempt to lower property taxes paid to support K-12 schools.

One, the older one, shows up as a discount on your annual property tax statement that arrives in the mailbox each fall. A line on the form tells you how much less you have to pay.

The other one — the one we’re talking about now — was adopted four years ago, and it requires taxpayers to claim the credit on their annual state income tax form.

The rationale for this special filing was that taxpayers didn’t really see the older tax break the state was providing amid the lines of figures detailed on the annual property tax statement.

The state wasn’t getting full credit for the tax breaks it was providing, one senator said, reasoning that if taxpayers had to file for the credit on a state income tax form, they will realize that the Legislature is working to reduce property taxes.

Well, that never fully came to pass.

Up to 45% of taxpayers never filed to get the refund via their state income tax filing, leaving millions in credits (more than $250 million in the most recent year) unclaimed.

That ain’t chicken feed, folks.

I don’t know about you, but if someone wants to give me money, send me a check, don’t make me do some mathematical gymnastics and fill out a line on a form.

State officials expected that taxpayers, over time, would become more aware of the need to file for the refund. But that doesn’t appear to have happened.

Two years ago, officials told me that 40% of taxpayers had failed to file for the credit. But during the special session, that figure had somehow increased to up to 45%.

How that happened wasn’t fully explained, though my guess is that the Pillen Administration — which has rightly been seeking to do away with the need to ask for the refund — felt that if nearly half of taxpayers were missing out on a tax break, it would be easier to sell such a change.

For good measure, state senators added an additional $185 million on top of the $565 million in tax relief that was already being provided through the income tax credit. And they put some new spending restrictions on counties and local municipalities.

To be clear, the only people getting additional property tax relief are those who failed to file for their tax break. But something is better than nothing, they say.

Some senators complained that what the Legislature passed was the “absolute minimum” that could be provided. And Pillen, at his post-special session press conference, expressed frustration, though he signed the three bills that were praised as a “big deal.”

Those measures side-stepped the most controversial proposals by the governor, such as elimination of tax exemptions on sales of things like candy, auto repair services and purchases of farm and business equipment. And the bills didn’t, as once proposed, remove a fair amount of local control over K-12 schools.

“Politics is the art of the possible,” is how Otto von Bismarck, the “Iron Chancellor” of Germany, once put it.

And the State Legislature passed what was politically possible.

Team Pillen has at least two more years to convince the Legislature that more is possible.

Paul Hammel has covered the Nebraska state government and the state for decades. He retired in April as senior contributor with the Nebraska Examiner. He was previously with the Omaha World-Herald, Lincoln Journal Star and Omaha Sun. A native of Ralston, Nebraska, he loves traveling and writing about the state.