Gov. Jim Pillen is joined by State Sens. Lou Ann Linehan and Rob Clements in unveiling a proposal to reduce local property taxes over three years. July 18, 2024. (Zach Wendling/Nebraska Examiner)
BY: ZACH WENDLING – JUNE 16, 2025 5:15 AM
FROM NEBRASKA EXAMINER
LINCOLN — Gov. Jim Pillen isn’t wavering from his goal to secure more property tax relief for Nebraskans, and he’s not significantly modifying his strategy of pushing for a broadened sales tax to pay for it after a similar approach failed a third straight time.
Pillen said he will keep the conversation alive for state government to take on the annual operational funding of all of Nebraska’s 245 public school districts, but not to run them. Local school boards would retain property tax authority for bonds and construction projects, for example, a route that Pillen said would require decreased state spending on other budget priorities and a broadened sales tax base.
“We’re going to be bold and courageous and work hard to get 33 votes to get there,” Pillen said in a post-session interview with the Nebraska Examiner, noting the legislative threshold needed to overcome an anticipated filibuster.
The governor’s approach mirrors the shift the Legislature approved in 2023 that moved community colleges largely off the property tax rolls and onto income and sales taxes. The move led to a property tax decrease of $6 million last year after two years of nearly $300 million annual increases. Local governments annually collect about $5.3 billion in property taxes.
All property taxes are locally assessed and collected, and the state has created tax credits to offset those costs, which were greatly expanded in 2020.
Freshman State Sen. Tanya Storer of Whitman, a rural Republican, has argued the tax credits are “feeding the demon” of increased local spending over time and taking away accountability from local taxing authorities. She previously served as a Cherry County commissioner.
Sales tax expansion stalls
This April, Pillen pledged to keep property taxes flat after this year’s special session, saying the work would be done, “not a shadow of a doubt.” But he fell at least $100 million short of what it would have taken to accomplish that goal in the face of a major projected budget deficit.
This spring was the third time a sales tax push had failed in the most recent legislative sessions. All three times, a handful of Republicans joined most Democrats to oppose the changes.
In spring 2024, lawmakers abandoned an initial across-the-board sales tax rate increase and then withdrew a push to apply sales taxes to some currently tax-exempt goods or services.
In summer 2024, lawmakers came back for a rare special session dedicated to property tax relief but didn’t repeal a single sales tax exemption in the face of opposition.
In spring 2025, lawmakers found too little support for removing a single sales tax exemption.
That means property taxes will increase when assessed this December, Pillen acknowledged.
Services currently exempt from sales taxes that have been considered for taxing include lobbying, marketing, dating services, swimming pool cleaning or maintenance and limousine services.
One silver lining for property taxpayers this session was the formation of a School Financing Review Commission for long-term school funding reform, which could lead to future reform proposals.
‘Eyeball-to-eyeball conversations’
While lawmakers have the ultimate say on new legislation, Pillen has made property taxes a defining issue of his tenure. He’s taken his pitch to Nebraska communities and has been blunt.
“If you don’t want to call, then don’t b— to me next year about it. If you don’t want to help, s—, I can’t do it all myself. I need everybody’s help. If you don’t want to call senators, then don’t b— to me next year. I’m working day and night,” Pillen said at a town hall in Fremont last June.
In mid-2024, Pillen hosted 26 property tax community forums from Scottsbluff to Auburn. He also organized a group of 17 lawmakers for an informal working group on property taxes, more than one-third of the Legislature.
State Sen. Jana Hughes of Seward, who also faces reelection in 2026, is continuing efforts to lower school property taxes. She led the new school finance commission at Pillen’s request.
Hughes plans to introduce new legislation next year related to school property tax levies.
Pillen told the Examiner that broadening the sales tax base can be the right approach. He points to South Dakota as a model, which has a broad tax base, much lower property taxes, and no income taxes. He joked that Mount Rushmore isn’t printing that tax revenue.
While opponents view the sales tax push as a “tax shift,” Pillen argues the true shift has been the lost sales tax revenue making its way to property taxes — what he calls “foolery.”
So what will change in Pillen’s approach? More one-on-one conversations with lawmakers.
“We are going to sit down, have eyeball-to-eyeball conversations, and if I’m wrong, somebody’s gotta convince me, and I gotta do a better job,” Pillen said.
‘We don’t play politics’
Among the first steps of those conversations is defining what a “tax cut” is, Pillen said, because a fix must come now, not in “X years.”
“We’re not going to give up until we do,” Pillen said.
As Pillen eyes reelection for another four-year term in 2026, he says that his goal for Nebraska by 2030 is to put the state in a strong position, with property taxes fixed. He says he’ll remain focused on his four tenets, “kids, taxes, agriculture and values,” which he said with a laugh: “I’m not smart enough to create new.”
“There’s a lot of work around those four that continue on,” Pillen said, asking who could have thought an issue to tackle this year would be curbing all-day cellphone use by Nebraska’s K-12 students.
Pillen’s 2026 reelection message: “We’ve done what we said we’d do.”
“We’re not afraid to stand up and [say], ‘Hey, we’ve got to talk about God, the Father, Son and Holy Spirit.’ It’s important that we protect blue. It’s important we talk about our Second Amendment rights,” Pillen said.
Pillen said he’s also not afraid to admit mistakes, such as first rejecting a pandemic-era expanded summer food aid program for children in late 2023 that he later accepted in spring 2024.
Pillen said he and his team are “just getting started.”
“We don’t play politics,” Pillen said. “We do what we believe is right, and that’s what Nebraska wants.”
