Nebraska may become the first state in the country where K-12 schools aren’t funded by property taxes, as Gov. Jim Pillen (R) plans to call a special legislative session in late July focused on property tax reform. [Nebraska Examiner]

The big picture: Gov. Pillen and state lawmakers aim to introduce legislation that would remove the burden of K-12 public schools’ operational costs from property taxpayers. These costs currently account for about half of a typical property tax bill in Nebraska. [KETV]

Driving the news: In recent weeks, Pillen has been canvassing the state to build support for a significant overhaul of property tax funding. However, he has yet to release a detailed written proposal. Key details remain uncertain, such as whether all property taxes will be eliminated or just those funding school operations, how increased sales taxes would compensate for the revenue loss, and the timeline for these changes

  • “The [Nebraska] Constitution’s crystal clear: Our job is to educate our children,” Pillen said on his radio call-in show last month, according to the Nebraska Examiner. “The state of Nebraska is supposed to—not property taxpayers.”

Zoom in: If the proposed changes move forward, Nebraska’s model could follow the state’s recent shift in community college funding, where the state assumed greater financial responsibility while local property taxes were reduced​. 

Why it matters: Eliminating property taxes for school funding could reduce financial disparities among school districts, which currently vary heavily based on local property values. The shift could also centralize funding decisions at the state level, potentially reducing local control over school budgets. 

  • Other states have explored various methods to address the inequities in school funding tied to property taxes. For instance, Vermont has a statewide property tax to ensure uniform school funding across districts, while Hawaii operates a state-funded education system without local property taxes. Meanwhile, states like Illinois and New York have high reliance on property taxes, contributing to significant funding disparities between wealthy and low-income districts. [Education Week] 

What’s next: Transitioning K-12 school funding away from property taxes would be a multiyear effort, likely involving numerous legislative sessions to refine and implement the new funding mechanisms. Nebraska’s special session is expected to begin on July 25.