State Rundown 8/8: States Laying the Groundwork for Future Tax Battles

Whether they’re in a special session, gearing up for one, or prepping for 2025, states around the country are focusing on important tax fights. Notably, property tax remains a top issue. Nebraska lawmakers are in the thick of it, as they debate a key—and now pared-back version—of a proposal that would lower property taxes by expanding the sales tax. Meanwhile, Colorado leaders are eyeing a possible special session if they can negotiate a deal with the sponsors of property tax ballot initiatives that would result in lawmakers approving a smaller property tax cut in exchange for the ballot sponsors cancelling their measures. Finally, Montana Gov. Greg Gianforte is expected to receive his Property Tax Task Force’s long-awaited list of recommendations that will feature a centerpiece proposal that includes a new property tax exemption.

Major State Tax Proposals and Developments

• NEBRASKA’s tax-focused special session is off to a wild start, with committee hearings completed on all 81 bills and 24 constitutional amendments proposed and lawmakers now moving on to debate as a full body. That debate has started with frustration over what are seen as inappropriate pressure tactics, disrespect for the legislative branch, and lack of transparency on the part of Gov. Jim Pillen and his allies, particularly considering the governor himself stands to profit by hundreds of thousands if his favored plans are enacted. That favored approach – lowering property taxes by expanding sales and “sin” taxes and severely restricting local governments’ budget authority – was not well received in its own hearing. Gov. Pillen has pivoted to supporting a scaled-down version, which includes a special carveout to exempt law enforcement from budget restraints. Lawmakers will begin discussing that version when it is made public, possibly along with many other ideas that were introduced as bills, such as legalizing and taxing marijuana, simply freezing property taxes, increasing (or gutting) state aid to schools, exempting the first $100,000 of home value from property tax, and many more. – DYLAN GRUNDMAN O’NEILL

State Roundup

• The potential for a special session in COLORADO is growing as Gov. Jared Polis and state leaders negotiate with organizers of tax cut ballot initiatives on what to do about property taxes in the state. Lawmakers feel that a smaller deal to cut property taxes could lead the outside groups to cancel their ballot measures.
• Buzz around eliminating the grocery tax in IDAHO continues to grow as lawmakers prepare for the upcoming 2025 legislative session.
• INDIANA Republican gubernatorial candidate Mike Braun released a property tax relief plan that has drawn criticism regarding the potential cost to local governments.
• MISSOURI voters rejected a ballot amendment exempting childcare facilities from property tax and approved an amendment requiring Kansas City, Missouri, to increase its funding of its police department to 25 percent of the city’s general fund. The former measure would have exempted childcare facilities from the property tax at an unknown cost to local governments. The latter measure requires a larger percentage of the Kansas City budget to go to its police department. Kansas City is also the only city in the state without local control over its police department; it is run directly by a board of majority state appointees.
• MONTANA‘s Gov. Greg Gianforte is expected to receive a 12-piece proposal from his Property Tax Task Force soon. The most discussed plan is a homestead-comstead exemption that would cut the tax rates for primary residences and long-term rentals worth up to $1 million in addition to changes to rates for properties valued over that threshold and commercial properties.
• NEVADA voters will decide this November on a measure to exempt diapers from state and local sales taxes.
• NEW YORK lawmakers did not succeed in passing permanent improvements to their middle- and low-income family supports this year, but they did pass a one-time payment to families who receive the Empire State Child Credit. Eligible families will receive those payments this month.

What We’re Reading

• The Massachusetts Budget & Policy Center published a helpful rundown showcasing the public services the state was able to fund with help from revenue raised by the recently enacted millionaire’s tax known as the Fair Share Amendment. Things like universal free meals for school-age children, free community college, and free and expanded bus service will now be available to residents.
• ProPublica and The Seattle Times teamed up on an exposé about Washington state that all states could stand to learn from, chronicling how a tax break for data centers was sold to lawmakers and voters as an economic development booster, only to grow in cost and fail to meet its promises.

 

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