Nebraska Governor Pillen’s Special Session Won’t Be Very Special
Jim Pillen’s top legislative priority this year was to fund a 50% property tax cut that would favor the wealthy by raising Nebraska’s sales tax by two percentage points. It would have shifted the tax burden from the wealthy to the poor and the middle class. This regressive bill would have have saddled Nebraska with the highest sales tax rate in the region and devastated our economy.
Despite the fact the Republicans have a 2/3 majority in the legislature, Pillen’s tax shift plan went nowhere. His plan was so extreme it generated bi-partisan opposition. Even Republican allies of Pillen were staunchly opposed to raising taxes on most Nebraskans to cut property taxes. The plan lacked the necessary 33 votes to overcome a filibuster and was pulled in the closing days of the legislative session.
Pillen didn’t take his stinging defeat very well. The governor maintained that it’s “unacceptable” that the unicameral did not pass his bill to shift taxes this year. He told the senators he planned to call a special session to revisit the tax issue. “This Legislature failed to act. I will call as many sessions as it takes to lower property taxes. We’re behind at the end of the first half, but we still got a second half to go. Enjoy halftime. We’ll see you again here soon.”
Pillen responded to his loss by holding town hall meetings in twenty six communities in May and June. Pillen repeatedly requested the attendees to contact their state senators and ask them to support his plan. However, Pillen’s pleas for help didn’t lead to an outpouring of support, as he might have hoped.
The requested emails and calls never occurred, according to numerous state senators who had town halls in their legislative districts. Senators Ray Aguilar, Joni Albrecht, Carol Blood, Rob Clements, Steve Erdman, Teresa Ibach, and Lynne Walz all said they had “hardly any” or no feedback from the town halls in their districts. “Nobody has told us to support Pillen’s special session,” Blood said.
Pillen’s strategy was rather odd to say the least. He made the mistake of insulting some of the senators who have been his allies. Pillen directly criticized Julie Slama at a townhall in her district. “She’s got to change her ideology and understand balancing a checkbook and what it takes,” Pillen said.
The potshot Pillen took at Slama backfired. She replied to Pillen’s insult by saying: “Stop trying to raise taxes. That part of my ideology will never change. The governor can talk a big talk, but he still hasn’t had the courage to call and talk with me this interim. … My mom’s a retired bank teller — I learned how to balance a checkbook when I was 5.”
Another strange aspect of Pillen’s strategy was that he didn’t hold any townhall meetings in the Omaha and Lincoln areas. This part of the state comprises approximately 55% percent of the state’s population. Omaha and Lincoln lean Democratic but there are a sizable minority of Republicans in both communities.
Several senators, including Terrell McKinney and Justin Wayne were critical of Pillen for stiffing Lincoln and Omaha. The Governor rebutted this criticism by asserting that he meets with “business leaders” from Lincoln and Omaha on a regular basis. Apparently, Pillen isn’t listening to anybody else in the most populous part of the state.
At the same time, Pillen has been holding secret, closed door meetings with some senators in the hopes of arriving at a consensus bill. Blood blasted this aspect of Pillen’s strategy, contending that it was “counterproductive to creating sound policy.”
Pillen’s working group on taxes failed to arrive on a common approach to restructuring Nebraska’s tax system. In any event, Pillen proposed an outline last week of his plan to cut the state’s collective property tax bill by 50%. However, it was more of a press release rather than an actual plan because he left it up to the senators to make the hard choices on how to fund his plan.
Pillen proposed cutting property taxes by 50% by having the state take over funding K-12 schools, which account for approximately 60% of the typical property tax bill. Currently, around 50% of all public school funding comes from local property taxes. This aspect of his plan would end local control and make public school funding subject to the whims of a GOP majority in the legislature. In the event of a recession, school funding would be on the chopping block.
Shortly after Pillen’s press conference, a draft of his plan was leaked to the press. Apparently, the Republican governor plans to ask the senators to terminate up to 130 sales tax exemptions, including on the purchases of farming and manufacturing, and the energy used in agricultural and industrial operations. This would raise taxes next year by a whopping $928 million!
Pillen’s new plan generated a bi-partisan firestorm of criticism. Danielle Conrad labeled his plan a “reverse Robin Hood” plan, meaning it would take from the poor and give to the rich. “By its very nature, sales taxes are the most regressive tax,” said Conrad.
“Pillen’s plan, based on leaked information, ends all sales tax exemptions except for his own business interests. That’s corrupt. It’s robbing Peter to pay Pillen. … Working Nebraskan will be taxed to death, then taxed for burial. three people who will profit from his schemes are Bill Gates, Ted Turner, and Jim Pillen.” Julie Slama tweeted.
“I’m unapologetically a fiscal conservative,” Slama posted on X or Twitter. “That’s why I oppose Pillen’s plan to raise taxes on middle-class Nebraskans without real state spending cuts. … I’m going to stand up for what’s right — somebody’s got to.”
An analysis by the Lincoln Journal Star found that Pillen’s scheme would save him anywhere from $725,000 to $975,000. “He went around the state making promises and selling people on a plan — people who work for a living, who are genuinely hurting under the burden of high taxes in the state of Nebraska — and he comes out with a plan that’s going to financially benefit his family and force working Nebraskans to pay more in taxes,” Slama said, later adding: “It certainly raises some questions, some very serious questions.”
John Gage, director of the Americans for Prosperity of Nebraska, said in a statement that Pillen’s plan has “massive costs” and would implement “the largest tax increase in state history” — and that he didn’t think the plan would pass. This is remarkable since the Ricketts family funds the Nebraska chapter of this billionaire advocacy and lobbying group.
The reason why Pillen is proposing to raise sales taxes is because it’s the only source of revenue available to fund his scheme. “In 2023 the Legislature used a historic budget surplus of $1.9 billion to cut income taxes, shaving almost $1 billion annually from state revenues once the income tax cuts take full effect in 2027. That Legislature also made major spending commitments for initiatives that might lower property taxes — such as K-12 education, community colleges and property tax credits — but also on initiatives that definitely would not, like the Perkins County Canal and a new prison. Instead of using last year’s unprecedented budget surplus to enact transformational property tax reform, the Legislature overcommitted itself financially.” Rebecca Firestone, of the Open Sky Institute.
Despite the opposition to his scheme, Pillen went ahead and called a special session of the legislature to begin on July 25. It was a mistake for the governor to bring back the senators. Instead, Pillen would have been better off to continue to negotiate the contours of any new tax bill with the legislators in an open process and not bring back them back for a wasted session. This special session will most likely be a failure since there aren’t 33 votes to pass Pillen’s plan. It is just too extreme.
I would request that you contact your senators and let them know that you oppose Pillen’s extreme tax shift. Increasing sales taxes won’t convince young people to stay in Nebraska or return to Nebraska. It would have the opposite effect — the brain drain of young people would continue. The inscription over the main entrance to the Capitol is: “The Salvation of the State is Watchfulness in the Citizen.”
Numerous good Democrats and independents are running for legislature around the state. I would urge you to invest your time and money in some of the legislative races. The composition of the legislature makes a big difference. Many voters don’t realize how powerful and important the state senators are. A successful election cycle can put a check and balance on the ambitions of the extreme Nebraska GOP.
“Don’t agonize; organize. No whining; just winning.” Nancy Pelosi. Now let’s get it done!