.jpg)
On Jan. 25, Gov. Jim Pillen delivered his first State of the State address to the Legislature.
The beginning of his speech focused on his team’s transition since the November general election and the strong state of Nebraska today. He emphasized how our state’s greatest asset, people, continually show perseverance, grit, and determination to solve tough problems and overcome difficult obstacles.
Although the state is strong and growing, Gov. Pillen argued more needs to be done to retain Nebraskans and attract new residents. The governor’s budget proposal limits the two-year average growth in state spending to 1.3%, but still seeks transformative change for property tax relief, income tax relief, and education investment.
The governor included $2.4 billion in property tax relief in his budget recommendations. This relief would entail an additional investment of $390 million in the Property Tax Credit Fund and the full reimbursement of property taxes paid toward community colleges through a refundable income tax credit.
Additionally, the governor brought forward measures to change the valuation of agricultural and horticultural land from market-based to income-based assessment and cap agricultural land valuation growth. Under the plan, by fiscal year 20262027, a total of $7.1 billion in property tax relief will have been delivered to Nebraska property tax payers.
The governor also seeks to help Nebraskans keep more of their paycheck by reducing the state income tax. Under this proposal, the Legislature would create a “flat tax” wherein all individual and corporate income taxpayers would pay a flat rate of 3.99 percent by 2027. Additionally, Social Security income would be exempted from state taxes by next year.
If fully implemented, these changes would bring Nebraska more in line with other states like Iowa that are moving toward a flat income tax system, with the hope these changes will help reduce out-migration and make the state more competitive in attracting investment.
The governor also unveiled a proposal to provide “structural reform” in how the state funds public schools by providing $1,500 annually to every public school student in the state as foundation aid.
His budget proposal also would create an Education Future Fund, with an investment of $1 billion in fiscal year 2023-24 and an additional $250 million each year going forward. These dollars would be used to fund special education in Nebraska and provide $50 million ($25 million annually) for private school opportunity scholarship tax credits. At the same time, schools would have a 3 percent growth cap on spending that could only be overridden by a 75 percent vote of the school board or a 60 percent of voters.
For many years, Nebraska has had a severe prison overcrowding problem. To help alleviate this concern and protect public safety, the governor is proposing to construct a replacement facility for the Nebraska State Penitentiary. This facility is projected to house 1,500 inmates and provide additional space for programming. An additional investment of $95 million is included in the governor’s budget proposal and would add to the $115 million set aside by the Legislature two years ago.
Infrastructure is critical to meet the current need of residents and grow the state. Under the governor’s proposal, $100 million would be used to leverage an additional $400 million in federal funds to repair and build roads and bridges. He also seeks to create the Nebraska Broadband Office to coordinate the expansion and implementation of broadband in the state. Finally, I would like to thank everyone who called and emailed my office and showed up to testify before the Judiciary Committee in Lincoln on LB 77, Sen. Brewer’s constitutional carry legislation. I received hundreds of emails and scores of calls on this issue, and I am appreciative of your input.
I invite you to contact me at [email protected]. My office number is (402) 471-2801 and my address is: Sen. Barry DeKay, Dist. 40, P.O. Box 94604, State Capitol, Lincoln, NE 68509.
