Revenue Committee
February 28, 2025
Committee Chair: Sen. Brad von Gillern | Bills Heard: 4 | Full Transcript (PDF)
LB479: Increase funding for the Build Nebraska Act
Introduced by: Sen. Mike Moser | Testimony: 4 proponents, 0 opponents, 0 neutral | Read bill text (PDF)
Sen. Moser seeks to double Build Nebraska Act funding as construction costs spiral. The bill would increase the sales tax dedication from 1/4 of 1% to 1/2 of 1%, generating roughly $100 million annually for roads and bridges. NDOT reports a $150 million annual funding shortfall, and four major expressway projects have seen costs double in just four years.
Why it matters: Nebraska's transportation infrastructure is aging and increasingly expensive to maintain. Delays compound costs exponentially. The state's largest asset—its highway system—underpins economic development and public safety, yet funding has not kept pace with inflation and construction cost increases.
What they're saying: - Proponents: Construction costs have skyrocketed since 2020; the original 1/2 cent proposal in 2011 would have completed the expressway system by now. Sales tax is preferable to gas tax given electric vehicle adoption. Municipalities are already implementing local option sales taxes because they understand delayed infrastructure becomes far more expensive. - Skeptics: Sen. Jacobson argued the bill reallocates existing state revenue rather than raising new revenue, and he cannot support bills that don't self-fund. Sen. Kauth questioned whether the four projects listed actually need four-lane highways or are aspirational.
By the numbers: NDOT's 2023 needs assessment identified $16.9 billion in required transportation spending over 20 years, up from $12.5 billion in 2018. The Build Nebraska Act currently generates about $102 million annually.
What's next: No vote was taken. Sen. Moser indicated willingness to advance the bill to General File for floor discussion, noting it could languish at Select or Final Reading if revenue forecasts don't support it.
Committee sentiment: Skeptical: Sen. Kathleen Kauth Opposed: Sen. Mike Jacobson
Sentiment estimated from questions and comments — not stated positions.
LR12CA: Constitutional amendment to cap property tax assessments
Introduced by: Sen. Kathleen Kauth | Testimony: 2 proponents, 3 opponents, 1 neutral | Read bill text (PDF)
Sen. Kauth proposes constitutional amendment to freeze property tax assessments, modeled on California's Prop 13. The amendment would cap residential property taxes at 1.5% of sale price with a 2% annual inflation escalator, and agricultural land at 1.125%. Taxes would be fixed at the time of purchase and only increase with inflation, not property revaluation.
Why it matters: Nebraskans report being priced out of their homes as property valuations surge faster than incomes. The proposal aims to provide predictability and prevent surprise tax spikes, particularly for seniors and fixed-income residents. However, it raises fundamental questions about fairness, local government funding, and housing market incentives.
What they're saying: - Proponents: The amendment provides stability and prevents people from losing homes due to unaffordable tax increases. It encourages community stability and protects vulnerable populations. California voters have protected Prop 13 fiercely because it's popular. - Opponents: The amendment violates Nebraska's uniformity clause, creating inequities where neighbors pay vastly different taxes for identical services. California's experience shows it caused housing shortages, reduced young adult homeownership, and forced a 13% state income tax. New homeowners would pay significantly more than long-term residents. Local subdivisions would lose revenue, requiring state bailouts.
By the numbers: Sen. Jacobson's example: a 161-acre farm worth $14,000/acre currently pays $77.39/acre in taxes but would pay $210/acre under the proposal—exceeding the farm's $356/acre cash rent, making farming economically unviable.
What's next: No vote was taken. Sen. Kauth indicated willingness to work with committee members on refinements, particularly regarding agricultural land assessment rates. The proposal requires constitutional amendment approval and voter ballot placement.
Committee sentiment: Skeptical: Sen. Patrick Dungan Opposed: Sen. Mike Jacobson Unclear: Sen. Tony Sorrentino
Sentiment estimated from questions and comments — not stated positions.
LB439: Property Tax Circuit Breaker Act
Introduced by: Sen. Ashlei Spivey | Testimony: 2 proponents, 0 opponents, 1 neutral | Read bill text (PDF)
Sen. Spivey introduces targeted property tax relief for low- and middle-income homeowners and renters. The Property Tax Circuit Breaker Act would provide a refundable income tax credit when property taxes or rent exceed 5% of adjusted gross income, reimbursing 50% of the excess up to $4,000 annually ($5,000 for seniors). The bill targets relief to those most burdened rather than broad-based cuts.
Why it matters: While the Legislature has invested $3 billion in broad-based property tax relief, some residents—particularly seniors and fixed-income earners—still face unaffordable housing costs. Renters currently have no mechanism for relief despite rising rents. The circuit breaker approach allows targeted assistance while maintaining fiscal responsibility.
What they're saying: - Proponents: The bill targets relief to those most in need. It includes renters, who currently have no relief mechanism. It's a well-tested concept used in 29 states. It can be tailored to fit fiscal constraints through adjustable parameters. - Concerns: The $200 million fiscal note is substantial. Sen. Sorrentino's analysis showed the bill would provide $4,000 credits to retired couples with $150,000+ income and $10,250 property taxes—people who can afford to pay. Jon Cannon raised technical issues: the bill treats renter income differently than homeowner mortgage payments, and it may allow double-dipping with homestead exemptions.
By the numbers: Fiscal note: approximately $200 million annually. The state currently dedicates $3 billion (21% of General Fund revenues) to broad-based property tax relief. Habitat for Humanity reported property values rising from $130,000 to $230,000 in five years, causing mortgage payments to double.
What's next: No vote was taken. Sen. Spivey indicated willingness to work with the committee on amendments to address concerns about the fiscal note and income thresholds. She committed to providing follow-up information on technical questions raised during testimony.
Committee sentiment: Supportive: Sen. Patrick Dungan Skeptical: Sen. Brad von Gillern, Sen. Tony Sorrentino
Sentiment estimated from questions and comments — not stated positions.
LB712: Vaping products excise tax reform
Introduced by: Sen. Jana Hughes | Testimony: 0 proponents, 4 opponents, 0 neutral | Read bill text (PDF)
Sen. Hughes seeks to replace vaping tax bifurcation with uniform 40% wholesale tax. The bill would eliminate the current two-tier system—$0.05 per milliliter for products under 3 milliliters and 10% wholesale for larger products—and replace it with a flat 40% wholesale tax on all electronic nicotine delivery systems. The fiscal note projects $22-34 million in revenue for FY 2026-27.
Why it matters: The bifurcated system is inequitable and unsustainable. Small disposable vapes are taxed at $0.90 while JUUL pods are taxed at $0.14. Fixed per-milliliter rates become outdated as products evolve. Youth vaping remains a public health concern, with 10% of Nebraska youth under 18 vaping compared to 5.9% nationally. Research shows a 10% price increase reduces youth consumption by 7%.
What they're saying: - Proponents: 40% is reasonable; the average among wholesale-tax states is 56%. A percentage-based tax is more sustainable than fixed rates. The bifurcated system unfairly advantages small products. Youth vaping is a legitimate concern. - Opponents: 40% is excessive and will harm small businesses. High taxes drive consumers to out-of-state and illicit markets. Vaping is less harmful than cigarettes and should be taxed lower to encourage harm reduction. The bifurcated system was a recent compromise that should remain. Sin taxes are regressive.
By the numbers: Fiscal note: $22-34 million annually. Average wholesale tax among states: 56% (range 15%-95%). Nebraska youth vaping: 10% (vs. 5.9% nationally). Estimated Nebraska youth vapers: 27,200. Cigarette tax in Nebraska: $0.64 per pack (equivalent to ~8% retail tax vs. ~15% for vaping products).
What's next: No vote was taken. Sen. Hughes indicated openness to negotiation on the rate and potential phase-in over several years. Multiple testifiers indicated willingness to work with her on a compromise. She also expressed openness to increasing cigarette taxes to equivalent levels and extending taxes to CBD and Delta 8 products.
Committee sentiment: Supportive: Sen. Patrick Dungan, Sen. Mike Jacobson, Sen. Tony Sorrentino, Sen. Kathleen Kauth
Sentiment estimated from questions and comments — not stated positions.
Session Notes
The committee heard four bills on February 28, 2025. The schedule was adjusted to hear LB479 first, followed by LR12CA, then LB439 and LB712. Committee members present included Sen. Brad von Gillern (Chair), Sen. Tony Sorrentino, Sen. Kathleen Kauth, Sen. Mike Jacobson, and Sen. Dave Murman. Legal counsel Sovida Tran and Charles Hamilton assisted. Pages were Lauren Nittler (University of Nebraska-Lincoln, agricultural economics) and Jessica Vihstadt (University of Nebraska-Lincoln, criminal justice and political science). The committee received written position letters on all bills but no ADA testimony. No votes were taken on any bills during the hearing.
Generated by NE Wire Service | Source: Nebraska Legislature Transcribers Office This is an AI-generated summary. Verify all claims against the official transcript.