Nebraska senators spar over LB170 tax package aimed at property tax relief

Senator Brandt opened debate on LB170 and an associated amendment package meant to generate revenue for property tax relief, saying the measure ‘‘is a responsible, targeted effort to address the burden by broadening Nebraska’s tax base.’’ The package would remove sales‑tax exemptions for a list of discretionary services, raise the cigarette excise from 64¢ to $1.36 per pack, subject certain sodas and energy drinks to sales tax and replace Nebraska’s bifurcated vape tax with a 40% wholesale excise. Sponsor estimates given on the floor projected roughly $28 million annually from the service changes, $42 million from the cigarette increase and $25 million from taxing soda; the package would transfer $100 million a year to the school district property tax relief credit fund (tier 2).

The measure quickly drew floor debate. Opponents including Senator Dungan argued the bill ‘‘represents an expansion of a sales tax and a service tax that will affect every Nebraskan in the same’’ and raised concerns about regressivity and the impact on small businesses and low‑income households. Senator Mikayla Kavanaugh said the proposal was ‘‘a double tax on services, and that’s wrong,’’ asserting many services proposed for taxation are already subject to income taxes for the individual providers. Senator Duncan summed up his opposition later in the day: ‘‘This bill does not represent property tax relief. This bill represents a tax shift.’’

Supporters including Senator Brandt and Senator Jacobson said the changes target exemptions largely used by higher‑income consumers and would shift more of the burden away from property taxes. Senator Hughes, who sponsored the vaping provision, described her proposal as ‘‘the 40% wholesale, excise tax on vaping products’’ and cited public‑health research on excise taxes reducing youth usage. Senator Von Gillern and others urged caution on the long‑term structure but indicated willingness to work on amendments.

Floor action focused on procedural motions as opponents sought to block further consideration. Senator Mikayla Kavanaugh moved to indefinitely postpone (MO116); that motion failed on a roll call vote (4 ayes, 28 nays). A subsequent motion to reconsider the IPP vote (MO260) likewise failed (7 ayes, 35 nays). No final passage of LB170 occurred during the session recorded here; the bill remained on the floor with multiple amendments and procedural steps pending.

The debate highlighted three recurring tensions: whether broadening the sales/excise base is an acceptable means to fund property‑tax relief, how to protect small local service businesses from new administrative and tax burdens, and whether earmarking new revenue directly to the tier 2 property tax credit (rather than first placing it in the general fund) is an appropriate safeguard. Legislators also compared Nebraska’s effective property‑tax rate and neighboring states’ excise policy during the debate.

Next steps were procedural: multiple amendments were pending on AM13‑18 and LB170 following the failed blocking motions, and senators on both sides said they would continue negotiations and consider narrower packages or adjustments to individual tax items rather than a single, larger package.