The Nebraska state legislature on Friday approved a second round of increasing an existing property tax credit, but indicated that voters may be asked about major changes in the future.

As the House’s special session entered its third week, lawmakers were considering legislation that would convert an existing earned income tax credit into a property tax credit. That would lower taxes for Nebraskans who don’t claim the existing credit, but would have no impact on those who do.

While debating the proposal, senators highlighted the disagreements that blocked Gov. Jim Pillen’s original, much larger plan to cut property taxes by as much as 50% by increasing the sales tax. Senator Julie Slama expressed her opposition.

“I don’t agree with the policy that we raise tax revenues for the state on the one hand to take more money out of Nebraskans’ left pockets and put the same money in their right pockets, maybe a little less, to pat them on the head and say, ‘Look what the government has done for you,'” she said. “I would much rather just have my own money.”

Senator Lou Ann Linehan, who is leading Pillen’s plan, said the current system needs to be changed.

“We have a messed up, messed up sales tax exemption,” she said. “And I don’t like tax increases. I’ve fought for tax cuts the whole time I’ve been here. But just to say we’re not for sales tax on the things I introduced amendments to last night? Are you kidding me?”

These changes included imposing a sales tax on a range of services, from nail care to tattoos to lawn care.

Senator Machaela Cavanaugh rejected this approach, citing lawn care as an example.

“We have to think about the people who are really impacted by this, like low-income people, older people who have someone who takes care of their lawn. They probably already do that, probably for about $20 a month or something, but you know, they’re on a fixed income, they’re older, they can’t take care of their lawn or they’re disabled,” Cavanaugh said.

Senator Jen Day also expressed her opposition.

“Essentially, the changes we’re talking about today are tax increases, and that’s why many of us are not in favor of these changes because we’re not here to raise taxes on people,” Day said.

Senator Justin Wayne disputed this characterization.

“Eliminating a tax exemption is not the same as raising taxes,” Wayne said.

Before the legislature could vote on her amendments, Linehan withdrew them. She later explained that she did so to get a vote on the underlying bill.

Senator Rob Clements supported proposal LB34.

“LB34 is not a tax increase, it is actually an across-the-board cut,” he said. “LB34 provides $185 million in property tax relief, funded by affordable cuts in government spending.”

Further information from the special session of Parliament:

Lawmakers are divided on whether to do something or try more

The legislature is seeking budget cuts

Legislators push forward significantly reduced property tax bill

Parliament prepares important vote on property tax for Tuesday

Senators continue to discuss taxes

Special session debate: Should there be a special session at all?

Senator Terrell McKinney remained opposed and criticized the special session.

“What are we doing here?” McKinney asked. “We get into chaos every day. (There’s supposed to be) a plan. We left in April, I think. We only got a bill the day before and we still have no idea how this special session is going to end.”

After four hours, senators voted to end debate and then voted 39-8 to move the bill forward to a second round of approval. It must go through one more round of voting before it is sent to the governor.

Also on Friday, senators voted in favor of a proposed constitutional amendment that would allow owner-occupied residential property to be assessed at a lower rate for tax purposes than other properties. Currently, the Nebraska Constitution requires residential and commercial properties to be assessed at the same or near market value. Sen. Tom Brandt said lawmakers should have the ability to do things differently.

“Currently, we are forced to treat all residential properties uniformly, whether they are owned by a long-time Nebraskan or a multinational corporation,” Brandt said. “We have seen a significant increase in the number of out-of-state investors purchasing residential properties in Nebraska. Passing this bill will help homeowners who call Nebraska home.”

Senator Brad von Gillern questioned the LR2CA proposal. Von Gillern said lowering taxes on homeowners could lead to tax increases on businesses and renters.

“If someone pays less, someone else will pay more,” von Gillern said. “And I like the idea of ​​LR2CA too. I think we should push ahead with the investigation of the idea, but until we know who will pay more, we shouldn’t get too worked up about who will pay less.”

Senators voted 32-14 on the first ballot to approve the amendment, but it would require 40 votes to put it on this November’s ballot. Otherwise, it would require 30 votes to put it on the ballot in 2026. The measure would still need two more ballots to be approved and put before voters for a vote.

Debate on proposed budget adjustments to fund the expanded property tax credits continued Friday, with senators also approving them in a second round. Speaker John Arch said there would be further debate on the constitutional amendment on Saturday. After the mandatory “bridge day” on Monday, final votes are expected on Tuesday.