Sales tax, tobacco tax push doom Nebraska's ‘One Big Beautiful Bill' for property tax relief
State Sen. Tom Brandt of Plymouth, at podium, with Gov. Jim Pillen and State Sen. Barry DeKay of Niobrara, from left. Brandt serves as chair of the Legislature's Natural Resources Committee. DeKay chairs the Agriculture Committee. May 7, 2025. (Zach Wendling/Nebraska Examiner)
LINCOLN — Nebraska's version of 'One Big Beautiful Bill' for property tax relief went up in smoke Monday despite an effort to narrow new revenues to increased taxes on cigarettes and vapes.
It becomes the third property tax package in the past year to propose and fail to garner traction to use new sales tax revenues to lower property taxes. It also deals a significant blow to Gov. Jim Pillen's pledge to keep property taxes flat this year as he eyes reelection.
Legislative Bill 170, led by State Sen. Tom Brandt of Plymouth, failed 30-15. It needed 33 votes to overcome a filibuster from opponents across the political spectrum who opposed the tax 'shift.
The proposal originally sought to add sales taxes to 20 currently exempt goods or services, including pop, dating services, chartered jets, swimming pool cleaning and maintenance services and pet grooming. It also sought to hike the taxes on cigarettes (up to $1.36) and vapes (up to 40%).
The original package anticipated $110 million in new revenue, with $100 million directed to property tax credits to offset property taxes paid to local K-12 school districts.
'Property taxes remain one of the most painful burdens our residents face, impacting everyone from family farmers to first-time homeowners,' Brandt said. 'This legislation is a responsible, targeted effort to address the burden by broadening Nebraska's tax base.'
However, as happened at the end of both the 2024 regular session and an 18-day special session Pillen called last summer, lawmakers ultimately rejected expanded sales taxes on several goods and services, which could have raised about $53 million, Brandt's estimates indicated.
'It's just rebranded or repackaged from the prior two failed attempts that this Legislature has not moved forward for a variety of different reasons, with strong support across a politically diverse coalition,' said State Sen. Danielle Conrad of Lincoln.
Brandt sought to narrow LB 170 to a lower revenue target of $80 million for new property tax relief each year by striking any broadening of the sales tax base. Instead, he proposed to increase cigarette taxes to $1.64 per 20-pack, which he said would raise nearly $60 million each year, and to increase vape taxes to 40% wholesale, which he said would raise about $15 million.
Both versions of LB 170 also included a proposal from Fremont State Sen. Dave Wordekemper to capture a 20% tax on cigars, cheroots and stogies purchased online, which senators estimated would raise $100,000 in revenue.
That left roughly $5 million that would have needed to be made up later, such as by adding back a handful of expanded sales taxes to the package.
State Sen. Jana Hughes of Seward, who has fought for increased taxes on vapes, said property tax relief is necessary for the grandmas or grandpas across Nebraska, as well as retirees and veterans, who are being priced out of their homes because of property taxes.
Hughes, State Sen. Mike Jacobson of North Platte and a handful of other conservatives in the officially nonpartisan Legislature defended the shift to new sales tax revenue as targeting 'optional' goods or services.
'We are so dang lazy we can't even go to the McDonald's drive-through by ourselves to go pick up our food. We hire someone to pick it up, and that's a service, and we're not even talking about taxing that service,' Hughes said.
A vote against LB 170, supporters said, was a vote against property tax relief.
'Don't tell me you're representing your constituents when you say you don't want to lower property taxes, because you aren't representing your constituents,' said State Sen. Mike Jacobson of North Platte. 'You're representing some ideology.'
Much of the pushback to LB 170 was bipartisan, including from Republican State Sens. Brad von Gillern of the Elkhorn area, chair of the Legislature's Revenue Committee, and Stan Clouse of Kearney, who said the bill was not 'sustainable' relief.
Clouse, a former longtime Kearney mayor, said the relief was 'not real' and was 'simply increasing revenue streams.' He suggested eliminating unfunded mandates was a better focus.
Added von Gillern: 'This is putting dollars into the top of a bucket that has a hole in the bottom of it.'
State Sen. Beau Ballard of Lincoln, a Pillen appointee, criticized LB 170 and its narrower components as a 'tax increase with no end in sight' that wasn't the right path forward, even as he identified property tax relief as a top priority for his district.
Von Gillern and State Sen. Tanya Storer of Whitman said the increased revenue also wouldn't keep up with property tax growth, which was nearly $300 million in two of the past three years. The exception in annual increases that high was last fall, after the state took on the tab for property taxes previously levied by community colleges.
The state budget passed last week included about $57 million in expanded property tax credits for next year, and about $11 million more for homestead exemptions. Even combined with the $80 million in Brandt's bill, property taxes would likely increase statewide next year.
That stands in direct contrast to Pillen's pledge to hold property taxes flat. He has said that, without 'a shadow of a doubt,' he and allies would find additional property tax relief this year.
Storer, a rancher in north-central Nebraska, said she was concerned that the continued reliance on property tax credits was 'feeding the demon' and taking away accountability from local taxing authorities.
'We still haven't pulled the right triggers,' Storer, a freshman lawmaker, said.
Another path forward for property tax relief includes buying down property tax levies directly, an approach led by Hughes in a Pillen-backed LB 303, which also sought long-term changes to how the state funds K-12 schools.
However, the provision to lower property taxes directly has since been stripped out of LB 303 to give time for senators to further study the approach before returning next January.
On the Democratic side, State Sen. George Dungan of Lincoln, who has consistently opposed expanding the sales tax to exempted items without lowering the 5.5-cent statewide sales tax rate, said the latest package would pick 'winners and losers.'
Dungan criticized repeated efforts for a 'grand slam swing' at tax policy when expansive adjustments need more time to be effective.
State Sens. Ashlei Spivey and Terrell McKinney, both of Omaha, noted LB 170 wouldn't have helped renters.
Conrad and State Sen. Dunixi Guereca of Omaha cautioned that an increased tax on nicotine products also wouldn't be paid by 'Big Tobacco' executives, but everyday Nebraskans.
Dungan and State Sen. Machaela Cavanaugh of Omaha added that increasing taxes on cigarettes and vapes would hopefully decrease tobacco usage, which could lead to less tax revenue.
'If we continue to just try to put a piece of tape over the hole in the boat,' Dungan said, 'it's not going to fix the actual problem.'
After the vote, Brandt said he was disappointed and that he had made his 'run' for more relief.
'If the Legislature doesn't want to give property tax relief, I don't know what else I can do,' Brandt told the Nebraska Examiner.
Voting to move forward on LB 170: Democratic State Sens. Wendy DeBoer of Omaha, Jason Prokop of Lincoln, Dan Quick of Grand Island, Jane Raybould of Lincoln and Victor Rountree of Bellevue.
Voting against LB 170: Republican State Sens. Bob Andersen of Sarpy County, Beau Ballard of Lincoln, Stan Clouse of Kearney, Glen Meyer of Pender, Tanya Storer of Whitman, Jared Storm of David City and Paul Strommen of Sidney.
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Nearly two weeks earlier, a coalition of advocacy organizations, including Common Sense Media, Fairplay and Encode, also called on congressional leaders to oppose the provision, writing in part that AI companies would have "no rules, no accountability and total control" if it were to take effect. In a letter dated May 21, 2025, the groups wrote: As written, the provision is so broad it would block states from enacting any AI-related legislation, including bills addressing hyper-sexualized AI companions, social media recommendation algorithms, protections for whistleblowers, and more. It ties lawmakers' hands for a decade, sidelining policymakers and leaving families on their own as they face risks and harms that emerge with this fast-evolving technology in the years to come. Discussions about AI companions and possible issues arising from their use have gained prominence in recent months. For example, research from Drexel University in Philadelphia suggests that inappropriate behavior, including sexual harassment, during conversations with AI chatbots is "becoming a widespread problem," the university said on May 5, 2025. Consumer Reports, another advocacy organization, also raised concerns about states being unable to deal with a variety of issues that AI technology poses, including sexually explicit images, audio and video created without a person's consent. Snopes has previously looked into other claims about the "Big Beautiful Bill," including whether it contains a provision allowing the U.S. president to delay or cancel elections. Arrington, Jodey. "Text - H.R.1 - 119th Congress (2025-2026): One Big Beautiful Bill Act." 2025, Accessed 4 June 2025. Brody, David. "The Big Beautiful Bill Could Decimate Legal Accountability for Tech and Anything Tech Touches." Tech Policy Press, 27 May 2025, Accessed 4 June 2025. Cornell Law School. "Commerce Clause." Legal Information Institute, 18 Sept. 2018, Accessed 4 June 2025. Hendrix, Justin. "Transcript: US House Subcommittee Hosts Hearing on 'AI Regulation and the Future of US Leadership.'" Tech Policy Press, 21 May 2025, Accessed 4 June 2025. Open letter from consumer advocacy organizations to congressional leadership. Common Sense Media, 21 May 2025, Accessed 4 June 2025.
