LINCOLN — The property tax portion of the Nebraska Legislature’s push for a tax relief package took a major step Monday toward passage.

Senators passed Legislative Bill 243 on the first round of debate, 41-1.

LB 243, as introduced by State Sen. Tom Briese of Albion and amended by the Revenue Committee, would make a series of changes aimed at easing the financial impact of increasing property tax valuations on Nebraska’s local property taxpayers.

Among the changes proposed, the measure would:

Add $247 million to the property tax relief credit fund, increasing the total annual investment to $560 million by the 2029 tax year. The fund would increase in subsequent years at the same rate as property valuations statewide.

Remove the 5% cap on the growth of a state income tax credit program granted on local property tax payments. Today, the amount of credit is capped at 5% even if property valuations statewide increase by more than 5%. If passed, this would let the credit keep pace with the valuation changes.

Place a new “soft” cap on K-12 school district spending growth at 3% of “total revenue” growth, except in districts experiencing rapid population growth. Districts could exceed the cap with support from 70% of their elected school board members or 60% of voters.

Add back a fourth member to the Nebraska Tax Equalization and Review Commission to reduce a backlog of property tax valuation appeals at the state level. The commission had four members until 2010.

Remove Nebraska’s regional community colleges from the local property tax rolls and fund them with state tax dollars — a tax shift of about $300 million. Under the change, the state would fund community college spending increases at 3.5% a year. If the state fell short of that funding goal, community colleges could tax local property again.

The Revenue Committee has been working to balance the interests of rural and urban senators by trying to ensure each side gets about the same amount of tax relief from Gov. Jim Pillen’s priority package of bills. Rural senators want more money spent on property tax relief. Urban senators are pushing for more income tax cuts and credits.

Briese and State Sen. Lou Ann Linehan, chair of the Revenue Committee, described the property tax portion of the package as vital to securing passage of the income tax cuts, including faster implementation of cuts to income taxes on Social Security and tax credits for child care.

“There really is a whole lot riding on this overall package,” Briese said. “The package needs to stay together. Those individual components are too valuable to too many Nebraskans to jeopardize this. They will really appreciate your support.”

Committee members staved off a number of amendments, ranging from a proposal by State Sen. Lynne Walz of Fremont restoring a 5% cap on revenue to another carrying State Sen. Steve Erdman’s EPIC consumption tax as an alternative.

A handful of senators, including Walz and State Sen. Danielle Conrad of Lincoln, objected to the committee lifting the 5% cap on the annual growth of the state income tax credit program for property taxes. They pointed out that the cap had been negotiated just last year.

But Linehan and other committee members made plain that any change adopted in the bill beyond the committee amendments risked forcing negotiations on another part of the tax-relief package and could risk passage of the whole.

“Many, many hours have been dedicated to Gov. Pillen’s package,” Linehan told the Nebraska Examiner after the vote. “Any changes would be problematic.”

This story was originally published by Nebraska Examiner, an editorially independent newsroom providing a hard-hitting, daily flow of news. It is part of the national nonprofit States Newsroom. Find more at nebraskaexaminer.com.