Legislature passes LB 34, capping local tax requests and creating $750 million school tax credit

A weekly legislative report said the legislature passed LB 34, a bill that limits how much counties and cities may request in property taxes and creates a $750 million School District Property Tax Relief Act.

The presenter said Governor Jim Pillin immediately signed LB 34 into law and indicated he will not call the legislature into another special session this year for further tax relief efforts.

Under LB 34, counties and cities may not request more property tax than they requested the prior year except for limited adjustments: increases for growth, amounts budgeted for approved bonds, and responses to emergencies declared in the prior year. The law ties an allowable inflationary adjustment to the state and local consumption expenditures and gross investment index (SLiCE), and it includes a 0% floor so a negative index would not force a locality to request less than the prior year.

The presenter noted several specific exceptions that permit higher tax askings, including funds budgeted for public safety, county attorneys, and public defenders. Voters may approve additional increases at the next regular election or at a special election held in May of odd‑numbered years.

The report said the new cap replaces the existing lid on restricted funds for counties but does not change the constitutional levy limit: counties remain subject to a levy limit of 50¢ per $100 valuation, with authority to allocate 15¢ to miscellaneous districts and 5¢ for interlocal agreements.

As part of the package, the legislature created the School District Property Tax Relief Act, a $750,000,000 property tax credit program that the presenter described as front‑loaded so the credit appears directly on property tax statements. The reporter said the program replaces a refundable credit that required homeowners to apply through their income tax filings; counties will receive two disbursements from the state to distribute to school districts and will not receive a commission for that distribution role.

The report also said the legislature adopted bills to sweep funds and interest earnings from state agencies into the state's general fund to help pay for property tax relief. A proposed constitutional amendment to create a separate owner‑occupied property class did not receive enough votes for closure and did not advance.

The special session adjourned sine die after 17 days, and the presenter closed by thanking county officials for their engagement during the session.