In Nebraska special session on taxes, some ideas to raise millions in revenue get little attention

LINCOLN, Neb. (AP) — Nebraska lawmakers began debate Tuesday on a special session bill to ease soaring property taxes, largely through mid-year budget cuts, caps on spending and shifts to sales and special taxes. But likely to be left on the cutting room floor are several bills designed to bring in millions of dollars a year in new revenue.

Among the new revenue measures are proposals to legalize marijuana and expand online gambling. Another would free up an estimated $25 million a year by allowing early parole for people who are incarcerated and meet certain criteria, as well as encouraging judges to offer alternatives to jail for some offenders — moves that would ease prison overcrowding and lower the state’s cost of feeding and caring for people in prison.

Republican Gov. Jim Pillen called the summer special session after the Legislature failed to pass his proposed plan to cut property taxes by an average of 40% during the regular session earlier this year.

Soaring housing and land prices in recent years have led to ballooning property tax bills for homeowners and farmers alike. Nearly all lawmakers in the officially nonpartisan Nebraska Legislature agree that ever-increasing property tax bills are forcing some people, including young and older people on fixed incomes, out of homeownership.

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But they disagree on how to fix the problem. Democrats accuse Pillen and his allies of trying to ease property taxes on the backs of poor people, while some hardline conservatives object to any tax increase without significant cuts to spending.

Democratic Sen. Terrell McKinney introduced the bill intended to ease prison overcrowding and costs, which has not advanced from committee.

McKinney and fellow Democrat Justin Wayne have also proposed bills that would legalize marijuana use and regulate its production and distribution.

“That could bring in potentially $150 million,” McKinney said Tuesday. “Y’all don’t want to entertain that conversation, which is wild to me if we’re coming here and you guys are saying to put everything on the table.”

The question of legalizing marijuana could appear on the November ballot after a petition effort turned in nearly 115,000 signatures to state election officials in July — more than the 87,000 or so needed. The Nebraska Secretary of State’s Office is in the process of verifying the signatures.

A plan by Democratic Sen. Eliot Bostar would put on the November ballot a proposal to allow online sports gambling. The General Affairs Committee advanced for debate of the full Legislature but without a companion bill that would adjust ballot language deadlines to allow it to make the ballot. Bostar estimates the proposal could bring in more than $30 million a year in tax revenue.

Wayne, who supports the expanded gambling bill, said Nebraska is losing out on revenue that state residents already spend on online sports betting by simply crossing the border into neighboring states that allow it. That happened during the most recent College World Series held in Omaha, just west of Iowa, which allows online sports betting, he said.

“They literally drove over to Carter Lake, (Iowa), if they were in a car, and if they weren’t, they walked over to the Bob Kerrey bridge, got on their phone and made a bet,” Wayne said. “All that revenue is gone.”

The plan backed by Pillen, which remained in flux Tuesday, calls for dozens of goods and services currently exempt to be subject to the state’s 5.5% sales tax. That includes such things as pet grooming and veterinary care, real estate transactions, lawn mowing and landscaping, taxi and other transportation services, moving and storage. Many agriculture services and purchases — including machinery, chemicals, seeds, irrigation, and grooming and veterinary care for livestock — remain exempt.

Pillen’s plan would also issue several so-called sin taxes on purchases of candy, soda, cigarettes and vaping items, CBD products and alcohol. It would also cap the amount public schools and city and county governments could collect in property taxes.

Lawmakers expected to debate a version of the governor’s proposal throughout the week.