GOP Senators Push to Pause Property Tax Relief, Income Tax Cuts Falls Flat

by John Gage

A Republican state senator pitched colleagues on a three-year pause on increases in property tax relief as well as continued income tax cuts to help close the state’s budget deficit. State Sen. Jana Hughes introduced an amendment that she said would provide the state with “substantial, structural” budget relief.

“I’m a little bit concerned with what this body will be facing 2 to 3 years down the line,” Hughes said Wednesday during debate on LB901 and her amendment to the bill. “We need to plan for the worst-case scenario.”

Hughes was forced to pull the amendment after she said she did not have enough support for her measure. Sources with knowledge of the situation told The Plains Sentinel on Wednesday that Hughes withdrew the amendment following pressure from Republican leadership, who opposed the measure.

The state senator said she viewed the amendment as a way to “protect our income tax cuts.” The amendment would pause property tax relief under the Property Tax Credit Act at four hundred thirty million dollars a year till 2029, and delay income tax cuts, set to go to 3.99% beginning in 2027, till 2029.

Hughes said the measure would save the state hundreds of millions of dollars. Republican State Senator Tom Brandt, speaking on the Unicameral floor Thursday, called the amendment “a commonsense solution.”

Several Democratic state senators spoke on the floor in support of the proposal on Wednesday. “We are being fleeced by the biggest corporations,” State Sen. Danielle Conrad said. Conrad accused Nebraska businesses of “taking advantage of our taxing system.”

The proposal comes as lawmakers have sought to fill nearly $650 million in the budget. So far, lawmakers have found over $500 million in cuts and transfers, but are still looking for additional ways to close the budget gap.

At an event last week, Hughes called the income tax cuts “not sustainable.”

“Every year that goes down, we lose $250 million in revenue, so that has not been helpful,” Hughes said. “I was told it would be fine. There were some people saying, ‘This is not sustainable. We shouldn’t do that.’ I just didn’t know enough to listen.”

Hughes blamed her newness to the Legislature for why she initially supported the cuts in 2023. “I was brand new,” she said.

LB901 is a Revenue Committee Bill — the revenue chair, State Sen. Brad von Gillern, considered her amendment “unfriendly.” The state senator warned colleagues from the floor that businesses would leave Nebraska if the Legislature did not allow the tax cuts to continue.

The Omaha Chamber President and CEO Heath Mello told The Plains Sentinel that attempts to pause income taxes would make Nebraska’s business environment less competitive.

“Any effort to pause or roll back income tax relief sends the wrong signal at the wrong time,” Mello said. “States across the country are lowering taxes to compete for jobs, talent, and investment. Nebraska cannot afford to move in the opposite direction. The only way out of budget deficits is by economic growth and if we want to grow our economy, we must remain focused on policies that make our state more competitive, not less.”

This is a developing story; check back for updates.

John Gage is the executive editor of The Plains Sentinel.

(Photo courtesy of the Nebraska Legislature)